FAYE
I'm Faye Witherall, an investment strategist at Blackrock here with our Advisor Outlook update for August. There are three key anchors this month. First, equity leadership rotated dramatically in July. We saw a sharp selloff across the AI stack. Tech went from the market's biggest driver to its biggest drag. Importantly, that performance was not fundamentally driven. Second quarter earnings results have been extremely strong.
We've seen broad beats across industries, even against a higher bar. Forward guidance remains well above historical averages. So despite the price action volatility, underlying fundamentals remain encouraging.
And finally, the fed remains in focus. There has been heightened uncertainty around the Fed's trajectory as Chair Warsh limits forward guidance. We continue to monitor oil prices and risks to inflation, but expect the fed will remain on hold.
MAXINE
Thanks, Faye, for that market backdrop. I'm Maxine, and I'd like to share how advisors are positioning their portfolios at the total portfolio level. ETFs deliver nearly two thirds of exposure led by index ETFs, but the mix varies by asset class advisors. Lean, active, and more specialized areas, including diversifying alternatives, flexible bonds and plus fixed income sectors within equities. U.S. large cap fund growth and value lean index.
While emerging markets are even more index oriented, with 80% of exposure implemented through index strategies.
Finally, alternatives remain under penetrated, with only 39% of advisors holding them. However, among those who do, the average allocation is meaningful at 8.7% of the portfolio. These exposures also lean heavily active, reinforcing the preference for manager selection in more specialized strategies. Check out the full Advisor Outlook and Advisor Portfolio Insights for more of our best thinking, and reach out to your local market team, or call 877.
iCRDSPMH0826U/S-5818879
Tech has moved from the market’s biggest tailwind to one of its biggest drags. Beneath the surface, AI remains powerful but increasingly volatile across the stack.
So far, Q2 earnings have surprised to the upside even against a higher bar (tracking 24% YoY), and forward guidance has been stronger than usual.
Inflation data have improved, reflecting broad-based declines across the basket. Still, oil remains volatile amid geopolitical tension in the Middle East, and we continue to monitor.
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U.S. large-cap and emerging-market equity allocations have been predominantly index-based, while alternatives and flexible bond strategies leaned more active.
Advisor portfolios held more small and mid-cap stocks than BlackRock models and overweighted industrials, real estate, energy and utilities, while underweighting technology and communication services.
Only 39% of advisor models held alternatives, although those that do allocated an average of 8.7%, with portfolios favoring gold and commodities.
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Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments.
This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change.
Actively managed funds do not seek to replicate the performance of a specified index, may have higher portfolio turnover, and may charge higher fees than index funds due to increased trading and research expenses.
There can be no assurance that performance will be enhanced or risk will be reduced for funds that seek to provide exposure to certain quantitative investment characteristics ("factors"). Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. In such circumstances, a fund may seek to maintain exposure to the targeted investment factors and not adjust to target different factors, which could result in losses.
Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments.
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