Of the index’s four measures, the most notable changes were the declines in the six-month and 12-month outlooks for the economy, both of which turned decidedly negative from January. Advisors’ view of the stock market was down less significantly, while the current economic outlook was viewed positively.
Rydex/SGI Advisor Confidence Index Results for February:
- Current economic outlook, +2.06%
- Six-month economic outlook, -2.17%
- 12-month economic outlook, -7.80%
- Stock market outlook, -1.43%
While the majority of the advisors surveyed said they were little concerned about the bond bubble bursting in 2011, more than half indicated they were reducing their fixed-income holdings.
“In terms of the big picture, the environment is more supportive of equities over fixed income,” said Kenny Landgraf of Kenjol Capital Management LLC.
In comparison with advisors, U.S. consumers are more positive about the economy and their own income prospects. The consumer confidence index as measured by the Conference Board moved ahead for the fifth consecutive month in February, climbing to a three-year high. The index, released Feb. 22, now stands at 70.4 (1985=100), up from 64.8 in January.
Comments From Advisors Participating in the Rydex/SGI Survey:
Ken Graves, Capital Research: “U.S. government bonds have been hit somewhat hard but they have likely not gotten their full due yet. There is more downside to come. We may see some short-term rebound in government bond prices but it will be a brief to intermediate term situation. Job growth will continue to hamper the speed of recovery.”
Rob Siegmann, Financial Management Group: “Those who use bonds in the context of a diversified portfolio, for safety and diversification, they will continue to provide an anchor during tough times. For equities, our firm remains optimistic, as we have been for the past 25 months."
James Dailey, TEAM Financial Managers: “Long-term valuations suggest equity markets have re-entered an explicitly speculative phase.”
Rydex/SGI AdvisorBenchmarking is a research and analysis center focused on the registered investment advisor (RIA) marketplace. Every year through its survey web site, www.AdvisorBenchmarking.com, the firm conducts surveys of advisors, covering a variety of business management and investment management practices.
Read about the growing use of ETFs as reported in February by Rydex/SGI at AdvisorOne.com.