The Riskalyze Report: Errybody in the club get TIPSy

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

October 16th – October 22nd

Winners (advisor flows TO these investments increased substantially):
  1. TIPS (TIP)
  2. MSCI USA Minimum Volatility (USMV)
  3. Emerging Markets (IEMG, VWO)

Losers (advisor flows FROM these investments increased substantially):

  1. Utilities (VPU, XLU)
  2. Gold (GLD)
  3. International Bond (BNDX, TPINX)

Josh here- Advisors seem to tightening up duration (once again) and preparing for the possibility of a rate hike to end the year. Inflation data and wage data have been running hotter of late and bond yields may have double-bottomed this summer. Libor is rising as well. The futures market was pricing an above-60% chance of a rate hike by December’s Fed meeting and the stock market hasn’t fallen apart over this. By then, the election will (hopefully) be over. So perhaps the stars are aligned for the second rate hike in a decade.

We’ll see.

According to Riskalyze CIO Mike McDaniel, “Advisor use of TIPS increased by 10% week over week. Advisor use of utilities decreased 10% week over week.” This is consistent with what you’d be doing if a rate hike appeared imminent and you felt more exposed than you’d otherwise want to be.

By the way, let me take this opportunity to wish Riskalyze founder and CEO Aaron Klein a happy birthday. It was a pleasure watching Aaron pick up a Wealth Management Award the other night for his firm’s technology. As the earliest adopter, it’s a pleasure to have seen it grow and evolve since 2012. Happy birthday, mogul. You’re gonna go places.

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