Advisors have become more concerned about portfolio management since the middle of 2015, according to Fidelity’s Advisor Investment Pulse survey, as market volatility has increased. A quarter of advisors said it was their top concern in the fourth quarter; respondents in the third quarter also listed it as their top concern.
Fidelity stressed the importance of considering multiple time horizons in a client’s portfolio, something many advisors may not be doing as they focus either on a tactical approach (viewing portfolios on a one- to 12-month horizon) or a secular one (10 to 30 years).
“In reality, because markets are dynamic, an investment approach that works for one time horizon may potentially deliver a very different result for another,” Scott Couto, head of distribution for Fidelity Institutional Asset Management, said in a statement. “Advisors may find it useful to frame their portfolio discussions with clients around multiple time horizons.”
Couto added that advisors who are already considering multiple time horizons in their clients’ portfolios should also consider the impact of the business cycle on risk. Over a one- to 10-year time frame, asset performance is tied to market factors like corporate earnings and credit growth, according to Fidelity.
Interest rates, market volatility, finding yield and changes in the regulatory and macroeconomic environment all rated highly as top concerns in the survey as well.