Investors retreat into defensive assets

25 August 2022
| By Staff |
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

 

MARKET INSIGHTS

sub-bg sidebar subscription

Never miss the latest news and developments in wealth management industry

Squeaky'21

My view is that after 2026 there will be quite a bit less than 10,000 'advisers' (investment advisers) and less than 100...

2 days 19 hours ago
Jason Warlond

Dugald makes a great point that not everyone's definition of green is the same and gives a good example. Funds have bee...

2 days 20 hours ago
Jasmin Jakupovic

How did they get the AFSL in the first place? Given the green light by ASIC. This is terrible example of ASIC's incompet...

3 days 19 hours ago

AustralianSuper and Australian Retirement Trust have posted the financial results for the 2022–23 financial year for their combined 5.3 million members....

9 months 1 week ago

A $34 billion fund has come out on top with a 13.3 per cent return in the last 12 months, beating out mega funds like Australian Retirement Trust and Aware Super. ...

8 months 4 weeks ago

The verdict in the class action case against AMP Financial Planning has been delivered in the Federal Court by Justice Moshinsky....

9 months 1 week ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND