Advisors Rebalance During Pandemic, And Here Is How The Situation Changes

In the first half of April, 41% of the financial advisors were actually looking for an increase in the allocations of active investments of clients. About 57% planned the increase of exposure to the U.S stocks. Advisors then made changes to client portfolios, which means that the number one reason for that was rebalancing.

A survey conducted for Fidelity Investments, which took place from April 8 through April 13, had 468 advisors as its target.

Even if the S&P 500 was well off its coronavirus-induced lows, the market was still experiencing irregular trading, so investors were worries about the impact of this pandemic.

The survey shows that advisors were looking for wise strategies, which means that they were getting into the safest asset classes. About 30% of the advisors planned to decrease their exposure to cash since they considered this thing to be a safe plan in these volatile markets.

With this survey, we also found out about other things: 26% of the advisors planned to increase exposure to an investment fixed income, and 31% of advisors planned to decrease exposure to international and emerging-market stocks.

By investing in the U.S stocks and in investment-grade bonds, they secure a more conservative strategy than simply loading up on international stocks and junk bonds. This is according to Matt Goulet, who’s the senior vice president at Fidelity Institutional. However, this thing still shows that some advisors took a proactive approach when it comes to managing client portfolios when there is a big crisis.

Goulet explained: “In times of volatility, advisers lean on active management to manage through those cycles, especially when you hit inflection points in the business cycles.”