By portfolio advisor, January 12, 22
From dropping the ‘run down’ 60/40 portfolio to the cash flow conundrum, industry experts envision the year ahead for wealth manager portfolios
“We suspect that 2022 will favor creative managers with more flexibility, while those who stick to their static benchmarks risk taking a hammer blow this year.
“Bonds and stocks have been correlated for some time now and managers have had plenty of opportunities to move away from the broken asset allocation model. However, many still have not done so, preferring to stick with the antiquated 60/40 portfolio which does not offer real diversification, has obsolete 40% of the portfolio for several years, and has led to underperformance. and increased hidden risk for their clients.
“As interest rates start to climb, we will see a massive sell off of large cap bonds and stocks ‘bond bridges’ like we did in 2018. Unfortunately for many large clients. wealth managers, this constitutes the bulk of their portfolio, and without the cash to exit these positions, they are like rabbits in the headlights.
Tags: outlook 2022 | Wealth management