Advisors pulled out of equities, increased exposure to alts in 2022
During one of the worst years in history for traditional portfolio models, financial advisors pulled out of equities and increased exposure to alternative investments.
At the end of 2022, advisors allocated an average of 53.7% of client assets to equities, down from 60.1% in 2021, according to data collected by advisor technology company Advyzon, which provides CRM, document storage, trading and portfolio management to wealth management firms. Meanwhile, allocations to alternatives jumped from 0.6% to 2.7%.
Not all of that can be blamed on the weak performance of equities, said Brian Huckstep, chief investment officer at Advyzon Investment Management, the turnkey asset management business that Advyzon launched in 2022.
“U.S. stocks were down 18% in 2022 while bonds were down just 13%,” Huckstep wrote on Advyzon’s blog. “That math explains roughly half of the drop in equity exposure from 60% to 54%.”
Allocations to bonds remained relatively consistent, increasing just 50 basis points. Use of alternatives, while still representing a small portion of overall allocations, surged thanks to increased availability of the products to advisors, said Shana Sissel, CEO of alts investing firm Banríon Capital Management.
“2022 demonstrated the value of evolving the traditional 60/40 portfolio to include an allocation to low-correlation alternatives,” Sissel said in a statement.
Not only has access to alternatives improved for independent advisors in recent years, but the number of different products available has exploded, said Daniel Dusina, the director of investments at Bluechip Partners, a Farmington Hills, Michigan-based registered investment advisor with $1.2 billion in assets under management. Alternatives can provide
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