BOSTON, Nov. 21, 2017 /PRNewswire/ -- Advisors expect an
uptick in volatility over the next six months, with geopolitical
issues and the U.S. political environment cited as the two biggest
potential catalysts, according to the Q4 2017 Eaton Vance Advisor
Top-of-Mind Index (ATOMIX) survey of 1,000 financial advisors.
Although 69% of advisors anticipate increased volatility in the
next six months, anxiety levels appear to be declining. Twenty-one
percent described themselves as anxious, down from 46% last
quarter. When asked to describe broad investor sentiment, advisors
reported mixed views among clients: Forty-two percent categorized
clients as wary and 39% said their clients are optimistic.
Despite a lower level of anxiety, advisors' concerns about
managing volatility, generating income, growing capital and taxes
all rose on the ATOMIX this quarter, with volatility ranking first
at 118.9, followed closely by income at 117.9.
"Advisors are reacting to the market's slow grind higher, which
has many skeptics wondering if a cliff lies ahead," said
John Moninger, managing director of
retail sales. "Prolonged uncertainty around policy implementation,
tax reform and future interest-rate hikes has created a sense of
uneasiness even during a period of steady economic growth."
Advisor age appeared to be a distinguishing factor. Forty-seven
percent of millennial advisors said they felt confident about the
market, but only 37% of all other advisors felt the same.
Millennial advisors were also more likely to believe their clients
share their positive outlook: Forty percent said their clients feel
confident, while only 26% from other generations reported confident
clients.
Advisors bullish on US equities but favor non-US
opportunities
Most advisors (59%) have a bullish outlook for U.S. equities,
but are less confident when looking ahead 12 months: Only 36% have
a bullish stance for the year ahead. Advisors have a
bearish-to-neutral outlook for the U.S. bond markets for the
quarter and for the next 12 months.
Non-U.S. equities appeared to be more appealing for advisors.
Seventy-five percent of advisors predict we will see growth
opportunities in emerging-market equities and 60% favor
international (non-U.S.) equities for growth over the next 6-12
months.
"Many advisors believe U.S. markets are fully valued," said Mr.
Moninger. "Looking outside the U.S. is an attractive option as
advisors work with clients to build diversified portfolios to meet
their investment objectives."
Politics and policy influence investment decisions
Advisors are increasingly turning their attention to
politics:
- Ninety percent said they closely follow politics as a business
practice.
- Sixty-eight percent said they generally make investment
recommendations with politics in mind.
-
- Of those, most (55%) viewed domestic policy actions as the most
important consideration, followed by foreign policy/international
relations.
- Ninety percent also said they are helping some or all of their
clients reposition their portfolios based on proposed tax
reform.
"Politics have increasingly dominated client conversations, and
many advisors are using the opportunity to discuss and better
understand their clients' motivations," said Mr. Moninger.
"Advisors are working with clients to prepare for tax reform in
addition to adjusting allocations in anticipation of tighter
monetary policy."
Advisors are poised for higher interest rates and are certain
2018 will bring more than one hike. Two-thirds (65%) predict there
will be two rate hikes and another 20% expect three or more hikes
next year. Their most popular strategies for generating income in a
rising rate environment include multistrategy bond funds,
floating-rate loan funds and high-yield bond funds.
Responsible Investing appeals to clients; advisors want more
education
Responsible Investing continues to gain traction with advisors
and their clients. Eighty-four percent of advisors reported their
clients have at least some interest in responsible investing
options. However, 82% also believe Responsible Investing has a long
way to go before it becomes mainstream.
Education may be the solution. One-third (33%) of advisors said
they are not adequately informed about Responsible Investing
strategies and another 38% said while somewhat informed, they are
looking for further education. Only 21% reported feeling very well
informed.
Accessing environmental, social and governance (ESG) data is a
challenge for advisors. Sixty-nine percent said corporate
sustainability data is hard for investors to obtain. Thirty-seven
percent worry about achieving diversification with a responsibly
invested fund.
"The lack of understanding about ESG principals prompted us to
create Calvert's Responsible Investing framework," said
Anthony Eames, director of
responsible investing strategy, Calvert Research and Management, an
Eaton Vance affiliate. "Our investment strategies follow the Four
Pillars of Responsible Investing – performance, research,
engagement and impact – which empower investors to seek competitive
returns and access the full capital structure with portfolios that
reflect their values."
Overall, most advisors believe Responsible Investing strategies
perform relatively well:
- Seventy-two percent said Responsible Investing solutions pose
the same or less risk as traditional strategies.
- Seventy-one percent said responsible investments are equally as
or less volatile than traditional strategies.
- Sixty-one percent believe responsible investment strategies
perform the same or better than traditional strategies.
Client priorities for Responsible Investing continue to be
environmentally focused, with clean energy (53%), sustainability
(45%) and climate change (41%) emerging as the dominant reasons for
selecting responsible investments.
"Clients are pursuing investment opportunities that align with
their personal values," said Mr. Eames. "The demand for Responsible
Investing strategies continues to rise, and advisors who deliver
those strategies will emerge as sought-after experts in the
field."
Eaton Vance ATOMIX Methodology
ATOMIX is calculated
based on the findings of a survey of 1,000 financial advisors from
a diverse group of companies. Eaton Vance contracted with a third
party to conduct the online survey from September 25 – October 20,
2017. ATOMIX uses a similar methodology as the U.S. Consumer
Confidence Index* (which has no affiliation with Eaton Vance) in
that it calculates a weighted average of current perceptions (40%
of the Index) and what advisors think about the trends (60% of the
Index). The Index set a baseline average of 100 for April 2014. Each component measured is tracked
quarterly to illustrate changes in advisor perceptions and changes
in trends over time. Future surveys will sample different financial
advisors and may produce different results.
Eaton Vance (NYSE: EV) is a leading global asset manager whose
history dates to 1924. With offices in North America, Europe, Asia
and Australia, Eaton Vance and its
affiliates managed $422.3 billion in
assets as of October 31, 2017,
offering individuals and institutions a broad array of investment
strategies and wealth management solutions. The Company's long
record of providing exemplary service, timely innovation and
attractive returns through a variety of market conditions has made
Eaton Vance the investment manager of choice for many of today's
most discerning investors. For more information, visit
eatonvance.com.
Calvert Research and Management is a leader in Responsible
Investing. The company traces its roots to Calvert Investments,
which was founded in 1976 and was the first to launch a socially
responsible mutual fund that avoided investment in companies that
did business in apartheid-era South
Africa. Today, the Calvert Funds are one of the largest and
most diversified families of responsibly invested mutual funds,
encompassing actively and passively managed strategies, U.S. and
international equity strategies, fixed-income strategies and asset
allocation funds. Calvert Research and Management is a wholly owned
subsidiary of Eaton Vance. For more information, visit
calvert.com.
* The monthly Consumer Confidence Survey®, based on a
probability-design random sample, is conducted for The Conference
Board by Nielsen, a leading global provider of information and
analytics around what consumers buy and watch. The Consumer
Confidence Index was started in 1967 and is benchmarked to
1985=100. The Index is calculated each month based on a household
survey of consumers' opinions on current conditions and future
expectations of the economy. Opinions on current conditions make up
40% of the index, with expectations of future conditions comprising
the remaining 60%.
Before investing, investors should consider carefully the
investment objectives, risks, charges and expenses of a mutual
fund. This and other important information is contained in the
prospectus and summary prospectus, which can be obtained from a
financial advisor. Prospective investors should read the prospectus
carefully before investing.
©2017 Eaton Vance Distributors, Inc. Member FINRA/SIPC
Two International Place, Boston,
MA 02110
Eatonvance.com/atomix
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