The Riskalyze Report: Advisors Lengthen Treasury Hedges

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 $120 billion and counting that advisors manage on the Riskalyze platform*. I hope we can uncover interesting trends for you each week…

Riskalyze

February 21st- February 27th

Winners (advisor flows TO these investments increased substantially):
  1. Long Term US Gov Bond (TLT)
  2. Intermediate US Gov Bond (IEF)
  3. Vanguard Dividend (VIG, VDIGX)

Losers (advisor flows FROM these investments increased substantially):

  1. Floating Rate/Senior Loan (OOSAX)
  2. Short Term US Gov Bond 3-7 year (IEI)
  3. Consumer Discretionary (XLY)
  4. Templeton Global Bond (TGBAX, TPINX)

Josh here – so this is interesting: Advisors are still adding to long-term treasury bonds, in the form of the TLT long-bond ETF, more than to any other asset classes for at least the third straight week. They’re also adding to the lesser duration IEF, which owns 7- to 10-year treasury bonds. That being said, they’re shedding some of their more cash-like treasury exposure in selling the IEI ETF, which is short- to intermediate-term bonds.

According to Riskalyze CIO Mike McDaniel, “Advisors use of TLT increased 20% week over week. Advisor use of IEF increased almost 15% week over week.  Advisor use of IEI decreased approximately 8% week over week.”

This is indicative to me of an advisor group that’s less worried about short-term risks but still every bit as desirous to hedge against the intermediate- to longer-term. So cash equivalents come off in favor of boosted stock exposure (of the dividend variety) but longer bonds are added to just in case. It perfectly matches with the market environment we’re in – stocks bouncing from the year’s lows, but nobody believing we’re quite out of the woods yet.

 

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