Financial portfolio consultants James Kelly and Kevin McCullough discuss how financial advisors’ portfolio allocations have adapted to address persistent inflation and challenging market conditions for stocks and bonds.
  • Financial portfolio allocations seek to hedge against persistent inflation, despite the possibility that inflation may have peaked.
  • Advisors generally favored US value stocks, which continued to outperform growth stocks throughout 2022, although all broad stock indexes declined.
  • Positive returns were difficult to come by – except in alternatives, notably managed futures.
  • Allocations to alternatives rose, hitting their highest level in five years, at close to 7% in the portfolios that were reviewed.
  • Regardless of what steps the Federal Reserve may take on interest rates, alternatives may offer potential sources of diversification and return.
  • In fixed income, advisors started to move back into some of the longer duration areas and higher quality, where 3% and 4% yields are now more available than they were a year ago.
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