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Rating:Which Asset Classes Will FAs Prefer In 2019? Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, December 03, 2018

Which Asset Classes Will FAs Prefer In 2019?

Reported by Neil Anderson, Managing Editor

If financial advisors stick to their plans, 2019 could be a great flows year for value funds, international funds, and certain types of bond funds.

That's one implication of the latest "Product Usage: the Advisor View" edition in Fuse Research Network's Advisor Trend Monitor series. This is the fifth year that the Boston-based research firm as published the report. The report draws on a Fuse and WealthManagement.com survey of FAs across different channels.

One question the researchers asked FAs was how they expect to change their mutual fund and ETF allocations to 25 different asset classes over the next 12 months. The most common answer was "no change" (for each asset class, at least two-thirds of FAs gave that response), but the "increase" and "decrease" responses varied wildly.

Of the 25 asset classes, FAs are net expecting to increase their allocations to 17 of them, while they are net expecting to decrease their allocations to 7 of them. (For one category, unconstrained bond funds fund, there is no net expected allocation change, as nine percent advisors expect to increase their allocation to the asset class and nine percent expect to decrease their allocation.)

On the positive side, U.S. large cap value funds lead the pack, with a net 16 percent of FAs (24 percent increase vs 8 percent decrease) planning to increase their allocations in the next months. Other big winners (10 percent or more net increase) include: emerging markets (15 percent net, from 23 percent increase vs 8 percent decrease); global (15 percent net, from 20 percent increase vs 5 percent decrease); international core (14 percent net, from 20 percent increase vs 6 percent decrease); U.S. mid cap value (13 percent net, from 17 percent increase vs 4 percent decrease); U.S. small/micro value (12 percent net, from 20 percent increase vs 8 percent decrease); municipal bonds (12 percent net, from 19 percent increase vs 7 percent decrease); short duration corporate bonds (11 percent net, from 21 percent increase vs 10 percent decrease); and U.S. small/micro growth (10 percent net, from 19 percent increase vs 9 percent decrease).

On the negative side, high yield corporate bond funds have the roughest outlook, with a net 14 percent of FAs (8 percent increase vs 22 percent decrease) expecting to decrease their allocations to the asset class in the next 12 months. Other asset classes with a tough outlook include: U.S. large cap growth (-8 percent net, from 11 percent increase vs 19 percent decrease); currency (-4 percent net, from 3 percent increase vs 7 percent decrease); government bonds (-3 percent net, from 12 percent increase vs 15 percent decrease); market neutral (-2 percent net, from 6 percent increase vs 8 percent decrease); managed futures (-1 percent net, from 6 percent increase vs 7 percent decrease); and absolute return (-1 percent net, from 7 percent increase vs 8 percent decrease). 

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