Advisers seek bonds and alts amid equity bearishness
Over 20 per cent of advisers plan to increase their allocations to private equity and credit in the next six months as they grow bearish on US and Australian equities.
Research of 174 Australian financial advisers by Fidante has found advisers are seeking alternate sources of alpha to drive returns in 2025.
Some 22 per cent want to increase allocations to private equity and 21 per cent want to increase allocations to private credit. Infrastructure allocations are set to increase for 29 per cent of advisers.
The proportion looking to decrease their infrastructure allocation sits at just 5 per cent, but for private credit, it sits at 19 per cent which is almost in line with the 21 per cent who are looking to increase it, indicating divided views on the asset class.
Evan Reedman, general manager of Fidante Affiliates, said: “Advisers have been quick to look further afield for pockets of opportunities – such as emerging markets, small caps and private markets – that can provide both diversification and alpha to a client’s portfolio.”
However, advisers indicated an overall bearishness in their asset allocation, with the largest increase to portfolio allocations being made in fixed income, where 32 per cent are looking to increase exposure, followed by cash at 29 per cent.
This is echoed by the belief of 29 per cent of advisers who said markets have “further to fall” in the next six months, and 26 per cent who believe it will stay the same.
This bearishness extends to Australian and US equities, with 44 per cent bearish on US equities and 39 per cent bearish on Australian ones. Their primary concern regarding global equities is the impact of US President Donald Trump’s economic policies and tariffs, cited by 50 per cent of advisers, followed by global geopolitical uncertainty.
On the other hand, the volume concerned about a global economic slowdown has fallen from 23 per cent last year to just 12 per cent.
Reedman said: “Markets have since rebounded and the instinct to remain disciplined has proven correct. It reinforces the value of financial advice in helping investors navigate market uncertainty and to ensure their portfolios are protected across market cycles.”
Last month, Bank of America’s global fund manager survey found investors were reducing their overweight positions in US stocks, cutting their US equity allocation to a net 38 per cent underweight, the lowest level in two years.
AUTHOR
Laura Dew
Recommended for you
Next year will see AMP roll out an end-to-end solution for its North platform, marking a shift in the firm’s position within the advice technology sector and building on adviser feedback.
My Dealer Services is predicting strong growth in self-licensing next year, citing recent ASIC action against Interprac and the desire for independence as key drivers of the self-licensing trend.
ASIC has handed down a six-month AFSL suspension to MW Planning after the firm failed to replace its banned responsible manager.
Despite the year almost at an end, advisers have been considerably active in licensee switching this week while the profession has reported a slight uptick in numbers.
