Advisers steering clear of new debt bets

Advisers have had their fill of bonds but have a hunger for [love] stocks, according to results of a January survey released by The Charles Schwab Corp. today.
Nearly two-thirds of advisers feel interest rates and inflation will rise.
As a result, only 6% of advisers said they are likely to invest more in fixed income — the lowest level since January 2007 when Schwab began its adviser surveys.
“Six to 12 months ago, advisers were loading up on fixed income,” said Bernie Clark, head of Schwab Advisor Services. “The fact that they don’t want more simply means they’ve probably reached the peak of their allocations.”
Six months ago in the Schwab July survey, only 28% of advisers thought inflation would increase, compared to 64% who worry about inflation now.
Likewise, last July only one in five thought the Federal Reserve would raise interest rates, but now 29% expect a Fed-fueled rise.
ETFs remain the top investment vehicles advisers are likely to turn to, and Mr. Clark thinks some fixed-income ETFs have been used as cash substitutes in order to generate a bit of yield.
“Will that be liquidated” if rates rise? he asked.
At the same time, advisers have grown more bullish on stocks. In January of this year, 77% said they expected the S&P 500 to rise in the next six months. That’s up from 63% in July 2010 and 65% in January 2010.
The survey is based on responses from more than 1,300 independent Schwab-affiliated advisers who were surveyed between Jan. 18 and Jan. 28, 2011.