Increasing market volatility prompted financial advisors to shift client portfolios away from stocks in the first quarter toward bonds and alternative assets, Natixis Global Asset Management reported recently. The average moderate-risk portfolio in the report gained 0.6% in the first quarter. However, portfolios with greater diversification fared best.
The top quartile of portfolios gained 1.5%. These had the lowest allocation to stocks (43% of assets), the highest allocation to alternatives (9.7%) and the biggest “diversification benefit”, which measures how much risk is reduced through diversification (22.4%).
According to Natixis, the average portfolio in the first quarter had 50% of assets in stocks, down from 53% a year earlier; 29% in bonds, up from 28%; and 7.7% in alternative strategies, up from 6%. Of the remainder, investors held 7.6% in allocation funds and 5.4% in real estate investment trusts, commodities and cash.
The Natixis Portfolio Clarity Trends Report measured the composition and performance of 352 portfolios that U.S. financial professionals submitted for review from October through March. These were among a broader sample of 2,032 portfolios submitted from January 2013 through March 2016.