Financial advisors faced asset allocation challenges in the first half as interest rates rose, volatility spiked and international equities produced poor performance, Natixis Investment Managers reported last week
Natixis’ midyear review of moderate-risk portfolios showed that in the afterglow of double-digit returns across global equities in 2017, U.S. stock markets hit new highs in January and then gave up some of those gains through midyear.
The Bloomberg Barclays US Aggregate Bond Index lost 1.6% in the first half as rising rates began to take their toll. Gold sold off, and commodities fell.
The Natixis new Portfolio Clarity U.S. trend report is a semi-annual analysis that compares performance and asset allocations of moderate model portfolios with each other and selected benchmarks. The current data represent 250 portfolios submitted by financial advisors from Jan. 1 to June 30 and 3,495 portfolios submitted from Jan. 1, 2013, to June 20 this year.
The new analysis showed that with minimal opportunities for outperformance through asset class selection, dispersion among the moderate model portfolios was narrower than usual, with the bottom quartile portfolios generating negative returns for the first time since 2013: -0.8%, compared with 1.5% for the top quartile.