Fact-Based Trends From Cogent Reports™
Following a period in which advisor-controlled assets have been gradually shifting toward lower-fee, passively managed investment strategies, advisors still see an important role for active management. In fact, according to Cogent’s Advisor Brandscape, when advisors were asked to anticipate how their use of 15 specific asset classes would change, more advisors plan to increase their use of actively managed than passively managed equities over the next six months. This finding signals that advisors may be looking to diversify their clients’ portfolios, as more of clients’ core holdings have shifted to passive products. As expected, advisors in the broker/dealer channels are fueling the anticipated gains in actively managed strategies, while interest in active equities among RIAs is much weaker.
In addition, as advisors seek growth, four in ten (41%) plan to increase their allocations to emerging markets. Advisors’ growing interest in emerging markets represents a shift from last year, when only one-quarter of advisors said they plan to increase their investments in this area. Notably, interest in this category is primarily being driven by advisors in the National and Regional channels.
In another important finding, advisors are most likely to say they expect to reduce investments to passively managed US fixed income (27%), yet there still appears to be an opportunity for active managers in the US fixed income category even as the Fed raises rates. Collectively, these findings point to an opportunity for active managers to show advisors how to successfully blend active and passive investment strategies in client portfolios while justifying the value of active management over the long term and through varying market conditions.
To learn more about the Advisor Brandscape report, publishing this month, review an overview.