The Riskalyze Report: Advisors Simplify their Fixed Income Exposure

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…


May 11-18

Winners (advisor flows TO these investments increased substantially):  
  1. Healthcare (VGHAX)
  2. Euro Equity (MDEFX)
  3. Manning and Napier Conservative (EXDAX

Losers (advisor flows FROM these investments increased substantially):

  1. Emerging Markets (VWO, DFCEX)
  2. Real Estate (DFREX, DFITX, MRLBX, DFGEX, RWO)
  3. Strategic Income (MWTIX, BGCAX, GSZAX, PAUDX)


Josh here – Once again we see REITs on the most-sold list among the more than $40 billion in advisor-managed assets on the Riskalyze platform. A lot of advisors I talk to have been thinking about simplifying the type of fixed income returns they’ve been seeking over the last few years the closer we get to what many believe will be a fall rate hike. The Fed is all but guaranteeing that they’re about to do their first one just to take it off the table, with no promises to continue hiking thereafter. The market doesn’t believe them as evidenced by the low probability (sub-30%) of a September liftoff in the Fed Funds Futures market.

But I think advisors do believe them and are simplifying accordingly. Part of simplifying means taking off risk (REITs are the equities of the FI world) and part of that means eliminating the types of funds that could throw a monkey wrench in a traditional asset allocation plan.

The monkey wrench, in this case, could be a “Strategic Income” fund – where bets are being made about timing and severity of rate moves. It’s not that these bets are fated to be wrong – some will, some won’t. It’s that traditional fixed income has a specific use in a portfolio, which is mainly to act as ballast when stocks undergo freakouts. A strategic fixed income sleeve won’t necessarily conform to that if it is, for example, overweight and levered to corporate credit while being short the long-bond or in some other such non-traditional posture.


In my practice, we use Riskalyze software tools to help assess clients’ true risk tolerance and to test portfolio configurations that match up accordingly. It’s changed our practice for the better, as I explain here.

Check it out today!

*(to state the obvious, Riskalyze does not share client sensitive data with me or use animals in testing).

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