Despite the rising interest rate environment, advisors do not expect to shy away from fixed income in the next 12 months. On average, advisors across all channels reported planning to allocate 30% of their clients’ assets to fixed income over the next 12 months. This level was consistent among the different advisor channels, suggesting that advisors across the industry see continued value for fixed income investments in client portfolios.
n average, advisors plan to allocate close to a third (30%) of clients’ proposed fixed income allocations to intermediate duration securities (3.5 to 6 years). That figure is slightly higher than the average allocation to short-duration fixed income, and almost double the average allocation to ultra-short issues. The intermediate duration target indicates advisors continue to balance a desire for higher yields with the long-term risk of rising rates.
Average allocations were consistent across all channels, suggesting that the status quo—waiting to see how rates respond to the Fed rate hike and to the volatile global markets—will remain in force for the coming year.
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