What Does 'Moderate Risk' Mean? Depends on Where You Live

Here are the global portfolio trends that Natixis discovered in its analysis.

United States 

Broad allocations changed little from the end of 2017, Natixis found. In equities, advisors increased exposure to U.S. large caps, and reduced exposure to international developed. Alternatives remained in line with 2017 weights except for a shift from managed futures to option writing strategies.

France

French advisors have reduced their allocation to multi-asset flexible funds on the back of poor performance throughout 2018, according to Natixis. Advisors have since been looking for true diversification away from traditional fixed income and equities, turning to absolute return fixed income strategies.

United Kingdom

According to Natixis, the only allocation change in the U.K. was a small reallocation from multi-strategy alternatives to other asset classes. "Perhaps [advisors] here are waiting for clarity on the tortuous Brexit process before deciding on any changes," the report notes.

Italy

Natixis found there was a large shift back into fixed income, in particular to European fixed income, while investors reduced positions in multi-asset funds. Italian government bonds also appeared in portfolios once again, according to Natixis.

Latin America

Investors' aversion to equity risk was stronger than their fear of rising rates as there was an overall shift from equity to fixed income — specifically global, emerging market and U.S. fixed income categories. In their equity allocation, advisors shifted from global equity to direct U.S. equity exposure where growth is still being favored over value.

Germany

With the anticipated end of quantitative easing in Germany, investors are considering shifting the fixed income mix in their portfolios, by increasing allocations to emerging markets or high-yield, according to Natixis. The report also notes that alternative strategies saw strong demand in 2018, especially absolute return bond funds to generate return in a low-rate environment. Exposure to alternatives is now close to that of multi-asset funds, according to the report.

Spain

In moderate portfolios, the main change Spanish advisors made in 2018 was a decrease in higher risk fixed income and conservative multi-asset funds. "In general, concerns about higher risk fixed income have clearly increased, especially for the lower-rated corporate credit," the report notes.