Investors' growing appetite for hedging risk—and higher profits in a low-yield economy—has advisors making more aggressive market plays, studies commissioned this spring show.
An Aberdeen Asset Management Inc. study conducted by Harris Interactive in March shows that advisors plan to increase their equity allocations in both the domestic and international markets.
In addition, an Options Industry Council (OIC) financial advisor benchmark study conducted by Bellomy Research and released May 12 finds that options usage among advisors is on the rise.
Home Country Bias Is Diminishing for Equities
"We believe that the survey reveals two forces at play," said Gary Marshall, chief executive at Aberdeen, in a statement. "One shows investors' increased risk appetite for equities in general, which is consistent with the findings of other studies. The other is the widening of investor appetite from a previous strong 'home country' bias to a more diversified international portfolio. We see advisors seeking to diversify client assets to access the growth potential of developing economies."
The Aberdeen online survey polled more than 800 financial advisors across wirehouses, regional brokerage firms, independent wealth management shops and other investment advice providers. Many financial advisors said they plan to increase the allocation of client assets to domestic equities, emerging market equities and global developed market equities in 2011.
When asked to indicate a preferred vehicle when increasing allocations to international or emerging markets, 60% of advisors in the Aberdeen survey chose open-ended mutual funds and 24% chose exchange-traded funds (ETFs) for investing in international or emerging markets.
