Global equity markets fell across the board in 2018, contributing to roughly two-thirds of the losses investors saw in their portfolios during the year, according to the annual Global Portfolio Barometer published by Natixis’ Portfolio Research and Consulting Group.
“Volatility returned in 2018 and portfolio risk levels were substantially higher. At the same time, signs of an end to the long bull market began to materialize,” Marina Gross, executive vice president of Natixis’ Portfolio Research and Consulting Group, said in a statement. “In a complete reversal of fortune, moderate-risk portfolios that saw double-digit gains aided by overweight allocations to equities in 2017 suffered grave losses due to overexposure to the same asset class in 2018.”
Natixis Investment Managers’ annual Global Portfolio Barometer offers insights into model portfolios and asset allocation decisions from across the world.
The report reviews a global sample of 421 “moderate risk” or “balanced” model portfolios from seven different locations: France, Germany, Italy, Latin America, Spain, the United Kingdom and the United States. The data excluding Spain covers portfolios analyzed by the Portfolio Research & Consulting Group in the six months ending December 2018. Spanish portfolio data is derived from VDOS data.
Natixis found significant differences in asset allocations among moderate-risk model portfolios in different countries, meaning investors with similar risk tolerances might get completely different portfolios and risk exposure depending on where they live.
For example, according to Natixis, moderate-risk portfolios in the U.K. and U.S. were most bullish, with equity weights in portfolios over 50%, whereas Italians allocated just 23% to equities.
In addition, in Italy and Latin America, around 40% of moderate portfolios were allocated to fixed income, compared with 20% in the U.K. and France. According to the Natixis analysis, the different ways regional advisors assigned their equity allocation was just as important as the performance of individual equity markets.
Here are the global portfolio trends that Natixis discovered in its analysis.