Consistent with last year’s responses, advisors are generally constructive toward all segments of the U.S. equity space, with each registering bullish to slightly bullish readings of over 50%. An examination of the equity category responses yields a bit more insight. A greater percentage of advisors – 20% vs 17% - respond as being solidly bullish on growth stocks relative to value stocks, which represents a reversal from last year. Also, while large- and mid-caps are still preferred to small-caps, the spread is narrower this year. These shifts may reflect the challenges of several of the industries that are dominated by large-cap value stocks, such as energy and industrials. Where the sentiment is truly cautious, however, is toward several of the debt asset classes. Approximately 50% of advisors are either bearish or slightly bearish in their views toward U.S. government debt, U.S. high yield debt, and international emerging market debt. This result is not surprising when taken in the context of generally low yields and uncertainty about the trajectory of normalization of Fed policy. Respondents were considerably more bullish, however, on international developed equities, as only 21% of RIAs report being at least slightly bearish. This is likely in response to a rebound in economic growth expectations in those regions as well as a perception of relative value.
Next Part 3 of 6: Sentiment Toward Asset Classes Under Consideration in Coming Year