The Riskalyze Report: Advisors Sell Fake Bond Holdings

At the request of so many investment advisors, my friends at Riskalyze share the big trends in the assets going into and coming out of advisor portfolios every week. The underlying data is aggregated from hundreds of thousands of client accounts across the $44 billion and counting that advisors manage on the Riskalyze platform*. I hope we can uncover interesting trends for you each week…


February 23rd – March 1st 2015

Winners (advisor flows TO these investments increased substantially):  
  1. Apple (AAPL)
  2. Aggregate Bond Index (BND, AGG)
  3. Real Estate (VNQ)

Losers (advisor flows FROM these investments increased substantially):

  1. Strategic/tactical Fixed Income (GSZAX, PUBDX, DBLTX)
  2. Telecom  (T and VZ)
  3. Energy (XOM, CVX)

Josh here – energy stocks, which advisors using the Riskalyze platform had bought on the dip, were for sale this week.

But the more interesting thing happening, in my view, is in fixed income. For six years, advisors have been forced to construct income models with loads of different asset classes in order to be able to show clients some decent current yield on their money. There is change afoot in this regard.

With the consensus building toward 2015 being the “lift off” year for Fed Funds rates, we’re steadily seeing the “better than bonds” trade taken off as well. Yesterday I noted that utility stocks were down 6.5% year-to-date and the index was below its 200-day moving average for the first time since August. This week, Riskalyze data indicates that advisors are also selling the similarly yield-oriented telecom stocks AT&T and Verizon.

They also booted some “strategic and tactical” fixed income funds while getting more plain-vanilla on the buy side with BND and AGG (bond index ETFs).

I expect to see more of this “non-traditional” fixed income unwind as we get closer to the expected rate hikes this June. The fixed income proxy trade is suspected guilty until proven innocent.

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