Investors retreat into defensive assets

investment-trends/

25 August 2022
| By Staff |
image
image image
expand image

Rising bearishness among investors has led to a retreat into defensive assets, according to the latest quarterly manager and intelligence trends report from Bfinance.

Against a backdrop of surging inflation and rapidly rising interest rates, the report noted that investors were challenged to rethink their vulnerability to equity market volatility.

A fallback into defensive assets was reflected by the Bfinance Risk Aversion Index, which moved deeper into bearish, risk-off territory, rising from 0.79 to 0.82 in the second quarter of the year.

Among the multi-asset managers tracked for the index, equity exposure fell to less than 32% (3 percentage points below the long-term average), while weightings to fixed income and other diversifiers rose to 68%.

According to August’s report, as investors sought out new sources of portfolio diversification, income and inflation protection and real estate attracted 31% of all new mandate searches, while private markets represented 68% of all new search activity for the 12 months ended 30 June 2022.

Equity mandate searches fell in the second quarter, accounting for just 20% of all new search activity over this period. Fixed income searches remained unchanged year over year at 15% of all new activity.

Despite the turbulence in public markets, the report noted that hedge funds and other liquid alternative strategies continued to provide investors with a “significant source” of diversification and returns.

While overall search activity for so-called diversifying strategies remained virtually flat at 11%, Bfinance noted a rising percentage of overlay strategies being implemented by its clients during the period, which resulted in this segment outstripping all others on a ‘proportion of assets’ basis.

 

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

5 months 1 week ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

5 months 1 week ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

7 months 2 weeks ago

The RBA has handed down its much-anticipated rate decision, following widespread expectations of a close call....

4 days 6 hours ago

The FSCP has issued a written direction to an adviser who charged clients “extraordinary fees” for inappropriate and conflicted advice, as well as encouraged them to swit...

2 weeks 5 days ago

ASIC has cancelled the AFSL of an advice firm associated with Shield and First Guardian collapses, and permanently banned its responsible manager. ...

4 weeks 1 day ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
2
DomaCom DFS Mortgage
95.46 3 y p.a(%)
5