Financial advisors polled by Fidelity Investments ranked portfolio management as their chief focus in the first quarter, and as part of this focus, they wanted to better understand how to allocate between domestic and international investments.
In fact, for the first time since it began surveying advisors, Fidelity said international markets ranked as one of their top five themes.
Advisors were concerned by political instability in various regions, economic uncertainty in Europe and the effect of the rising dollar on non-U.S. equities and treasuries.
Fidelity’s first quarter Advisor Investment Pulse found that market volatility, interest rates, and fixed income and yield took the third, fourth and fifth spots as advisors’ top-of-mind themes.
Interest rates were advisor’s top concern in Fidelity’s fourth-quarter survey.
The first quarter’s five themes together help explain advisors’ focus on portfolio management and asset allocation, Fidelity said in a statement.
“In a volatile market environment, one of the biggest challenges for advisors is how to help clients diversify their portfolio effectively without taking on undue risk,” Scott Couto, president of Fidelity Financial Advisor Solutions, said in a statement.
“What we’re hearing is that advisors are trying to leverage multiple asset classes to strike a balance between risk and reward. Their clients want to keep some peace of mind with fairly low-risk investments while potentially increasing returns.”
Cuoto said advisors continued to look overseas to help clients diversify their portfolios, even as the outlook for domestic equities was strong and the economy continued to benefit from the decline in oil prices. He noted that historically, a low correlation existed between international and U.S. stock performance.
“As economies stabilize and recoveries continue, some regions, sectors and companies may present a surprising potential for upside growth,” Couto said. “The rest of the world may be more complicated, but opportunities are emerging and advisors should position their clients to take advantage.”