How Did Advisor Portfolios Perform After COVID-19 Hit? Very Well, Says Invesco

Usually small-cap and value stocks outperform in economic recoveries but that did not happen during the period after the pandemic had started, explained Haghbin. In the past month, however, small-caps have outperformed large-caps and value stocks have bested growth, though to a lesser degree. 

Haghbin's advice to advisors: "Take a look at portfolios now. The vaccine news has ignited record-setting reversals of market leadership."  

Indeed, in the past month energy has outperformed health care, financials and tech, looking at  the performance of those iShares sector ETFs, but tech continues to outperform financials.

Haghbin told ThinkAdvisor that advisors, who typically have a home bias and overweight U.S. stocks, should consider adding more non-U.S. investments. "The U.S. equity sleeve currently is larger than usual," he said.

He also suggested that advisors reevaluate factors and sectors, noting the overconcentration of health care stocks in advisor portfolios. They should consider more investments in economically sensitive industries such as financials and consumer discretionary, Haghbin said. 

For the bond allocation of portfolios, he recommended that advisors "think about diversification in ways outside fixed income" because bonds are not providing the ballast they traditionally do due to their extremely low yields. Haghbin suggested adding commodities and other alternatives.

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