It’s time for financial advisors to play defense in client portfolios – and do it actively, according to a pair of BlackRock strategists.
Michael Gates, managing director at BlackRock, says the firm is reducing the amount of equity versus fixed income in their multi-asset portfolios following a period of strong relative stock performance. Gates added that the firm also slimmed its US overweighting within its equity sleeve, raising its non-US stock allocation.
“It's been a good year and we think that the next couple of months have the potential to be a bit choppy and sideways,” said Gates. “And we think it makes sense to pull in the risk of it.”
BlackRock’s US target allocation models have AUM of $131 billion. The target allocation models, which recently celebrated their 10th anniversary, allocate to 15 to 20 ETFs.
The upcoming election is another reason to reduce risk, according to Gates.
“Given the amount of difference between the political parties, a lot of real players in the economy are delaying budget decisions, waiting to see how this plays out,” said Gates. “It's going to have pretty meaningful differences depending on who prevails on election day.”
Similarly, Kristy Akullian, head of iShares investment strategy at BlackRock suggests investors look into reducing volatility exposure or adopting a buffer strategy ahead of what could be a rocky period for stocks.
“Obviously we have the macro uncertainty around what's going to happen with the path of rate cuts. We've also got the election. So there's a lot of looming event risk. And then add to that that September and October tend to be pretty negative months for U.S. equity markets,” said Akullian. “I think that what we're in for is kind of a choppy ride over the next couple of months.”
And like Gates, Akullian sees a growing need for fixed income to act as a defensive counterweight in a portfolio when things get volatile. She says the Blackrock Flexible Income ETF (Ticker: BINC) is a “sweet spot in terms of where we see opportunity to add ballast but also add income.”
Finally, Akullian says BlackRock portfolios are not only becoming more defensive, but increasingly active as well.
“We think that we're in a moment of moving from a passive revolution to an active evolution. And so what we see right now in the ETF market is that about 20 percent of all flows this year have gone into active funds, and about 40 percent of all launches have been active. So we see more space for that,” said Akullian.
Chicago-based Mesirow Fiduciary Solutions adds flexPATH's plan-level outsourced fiduciary book, boosting its retirement market reach to $164 billion.
Also, Raymond James's employee advisor channel adds breakaways from Wells Fargo and Stifel, while UBS welcomes an ex-Morgan Stanley duo in Indiana.
It promised guaranteed principal and 10% monthly returns. The SEC says it invested nothing.
Ten years after entering the fee-based annuity market, MassMutual Ascend says nearly half its lifetime sales came in the past two years alone – but barriers remain among fee-only advisors.
Amplify, WealthReach, Zeplyn and Zocks have unveiled partnerships aimed at automating portfolio management, content creation, account opening, and client communication.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
