The Riskalyze Report: Advisors React to Rising Rates

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 25th -June 1st

Winners (advisor flows TO these investments increased substantially):  
  1. Floating Rate (FTSL, RSFLX, LFRAX, SAMBX, OOSAX)
  2. Volatility Focused (PFR, SPLV, ACWV, USMV, EFAV)
  3. Low Duration Bond (CSJ, VBIRX, NEAR)

Losers (advisor flows FROM these investments increased substantially):

  1. Energy (GMLPX, EMLP, IYE)
  2. Global Infrastructure (TOLSX)
  3. Laddered Bond (PLW)

Last week interest rates on sovereign bonds around the world to varying degrees, with the yield on the benchmark German 10-year bund now trading close to 1% after bottoming out at just a few ticks above zero this spring. On Friday, US markets digested the May unemployment report from the BLS that was better than expected and solidified the up-trend in both overall hiring and wage increases.

This action had advisors adding both floating rate bond funds (that seek to keep pace with rising rates) as well as low duration bond funds (best thought of as an area within fixed income carrying very little risk of higher rates and the optionality of reinvesting at better yields down the road).

Should the economic data turn more mixed again, as it did in Q1, will we see these investment unwound? Or has the industry made its bed and truly hunkering down for a higher yield environment?  We shall see.

Also of interest, possibly – my piece from the weekend on the 10-year and the bets being made in regional bank shares of late.

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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