Advisor Top-of-Mind Index Survey

Transcription

1 Advisor Top-of-Mind Index Survey Fall 2018 Report Tap into the real-time perspectives of financial advisors. Our "ATOMIX" survey explores the importance of four key issues income, volatility, taxes and growth and tracks trends over time.

2 Generating income Managing volatility Reducing taxes Growing capital Main index trends Advisor Top-of-Mind Index (ATOMIX), Fall 2018 September U.S. bull market dominates The U.S. was the lone bright spot in global equities markets in Q amid new tariffs, a strengthening dollar and weakness in emerging markets. Meanwhile, the Federal Reserve continued to hike interest rates and the 10-year U.S. Treasury note yield rose above the closely watched 3% level. Investors and advisors focused on how higher rates may impact bond portfolios, keeping up with changes in the tax code and where to find growth if the economy slips into recession Income Volatility Growth Baseline= Taxes 2

3 3 ATOMIX Report Fall 2018 Market outlook Advisors seek robust, consistent income and are focused on growing wealth for their clients. What is your outlook for the U.S. stock and bond markets? 54% 34% 12% Stocks Bullish Neutral Bearish Bonds 26% 49% 25% Generating income is the dominant concern for advisors, ranking on the ATOMIX, up 24% from 2018 Growing capital ranked on the ATOMIX, the highest ranking since index inception in April 2014 and a 14% increase since 2018 Advisors are thinking about global opportunities: 26% of advisors are shifting the balance of U.S.-to-global assets to adjust portfolios for rising interest rates 46% of advisors say their interest in in emerging markets is increasing Value is starting to open up in emerging markets in the wake of the sell-off, but there are still numerous technical and fundamental question marks looming. With a challenging macro and technical environment, we expect volatility in the asset class to persist. Investors considering the EM debt market should rely on country-specific due diligence and careful evaluation of risk factors. Eric Stein, CFA Co-Director of Global Income

4 4 ATOMIX Report Fall 2018 Market outlook (cont.) How are you generating income for clients right now? 29% High-yield bond funds 25% Floating-rate loan funds 18% Government bonds 13% Multisector bond funds 11% Muni bond funds 4% Other Short-duration strategies are gaining in popularity: 64% of advisors are allocating to short-duration funds to protect against inflation, a 25% increase from % of advisors are shortening bond-strategy duration due to rising interest rates Floating-rate loans offer an important escape hatch from bonds today, delivering not only the muchneeded higher income, but also the asset class s defining anti-bond properties. They have yields rivaled by few other asset classes, while the absence of bond duration helps to diversify fixed-rate positions. Scott H. Page, CFA Co-Director of Floating-Rate Loans

5 5 ATOMIX Report Fall 2018 Sentiment Sentiment is mixed: Advisors are more confident than their clients. What is the primary motivation of your clients? Advisors describe themselves as confident (39%) and optimistic (32%), but they describe their clients as anxious (44%) and wary (34%) 43% Greed 57% Fear Volatility remains a concern and ticked up slightly from to on the ATOMIX 60% expect volatility to increase in the next 6 months 59% believe tariff-related actions from the U.S. and other countries will have an impact on market volatility 65% say midterm elections will have an effect on investment portfolios Several factors are driving market volatility. Geopolitical issues and/or conflicts 28% U.S. political environment 26% Fed's decisions on interest rates 22% Expectations for global growth 14% Pace of U.S. economic growth 10% Investors have adapted to higher volatility this year after an incredibly quiet A healthy dose of skepticism is appropriate, particularly with so many crosscurrents like global trade, inflation, interest rates and elections. Every market environment creates winners and losers, and this one is no different. We believe volatility will remain elevated and active selection and diversification may offer the best defense for investors. Yana S. Barton, CFA Portfolio Manager, Growth Equity

6 6 ATOMIX Report Fall 2018 Tax management Reform prompted renewed interest in effective tax management Most advisors believe municipal investments are effective tax management tools, but differ in their approach. 12% Don t use munis 35% Use laddered muni strategies 26% Allocate to muni funds or SMAs 27% Select individual bonds Advisors are extremely focused on tax management, which ranked on the ATOMIX, a 28% increase since 64% are making portfolio changes due to tax reform- 62% believe their practice will benefit from tax reform 56% say tax reform will continue to drive positive economic developments 54% report their clients will benefit from tax reform in the next year As short-term rates move higher and the Treasury yield curve flattens, many investors are thinking about how to earn income while also protecting themselves against rising rates. Municipal floating-rate notes, an often-overlooked part of the market, may be an attractive option for investors seeking tax-free income in a rising rate environment. Adam A. Weigold, CFA Senior Municipal Portfolio Manager

7 7 ATOMIX Report Fall 2018 Responsible investing Interest in responsible investing is growing, driving new business for advisors. How many of your clients have expressed interest in responsible investing? 16% None 17% All 35% Some 32% Most 60% of advisors say client interest has been consistent over the last six months; 35% said interest is increasing 44% report it is an important part of their practices, up from 31% in % believe that responsible investing has a long way to go before it comes mainstream, despite increased client interest 56% say that responsible investing is driving new business to their practices 35% report being very well informed about ESG and responsible investing strategies 54% admit they don t understand the connection between ESG performance and financial performance Financial materiality is the key to effective, impactful ESG research. Data show that firms that optimize their ESG practices tend to be rewarded for their efforts, along with their shareholders. Jessica Milano Director of ESG Research, Calvert Research and Management

8 8 ATOMIX Report Fall 2018 This material is for informational and illustrative purposes only. It does not constitute investment advice, a recommendation to buy or sell any particular securities or to adopt any particular investment strategy. Investing involves risk and you may incur a profit or a loss. The views expressed are those of the author and survey participants, only current through the date stated on the cover of this report. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. This report may contain statements that are not historical facts, referred to as forward-looking statements. Future results may differ significantly from those stated in forward-looking statements, depending on factors such as changes in securities or financial markets or general economic conditions. About Eaton Vance Eaton Vance (NYSE: EV) is a leading global asset manager whose history dates to With offices in North America, Europe, Asia and Australia, Eaton Vance and its affiliates managed $459.8 billion in assets as of September 30, 2018, offering individuals and institutions a broad array of investment strategies and wealth management solutions. The Company s long record of providing exemplary service, timely innovation and attractive returns through a variety of market conditions has made Eaton Vance the investment manager of choice for many of today s most discerning investors. For more information about Eaton Vance, visit eatonvance.com. About Calvert Research and Managaement Calvert Research and Management is a leader in Responsible Investing, with approximately $15.3 billion of mutual fund and separate account assets under management as of September 30, The company traces its roots to Calvert Investments, which was founded in 1976 and in 1982 became the first fund family to launch a mutual fund to avoid investment in companies doing business in apartheid-era South Africa. Today, the Calvert Funds are one of the largest and most diversified families of responsibly invested mutual funds, encompassing actively and passively managed U.S. and international equity, fixed and floating-rate income, and multi-asset strategies. Calvert Research and Management is a wholly owned subsidiary of Eaton Vance. For more information, visit calvert.com. ATOMIX Methodology The Advisor Top-of-Mind Index (ATOMIX) was calculated based on the findings of a survey of 618 financial advisors from a diverse group of companies. Eaton Vance contracted with a third party to conduct the online survey from August 20, 2018 September 7, The Advisor Top-of-Mind Index uses a similar methodology as the U.S. Consumer Confidence Index* (which has no affiliation with Eaton Vance) in that it calculates a weighted average of current perceptions (40% of the Index) and what advisors think about the trends (60% of the Index). The Index set a baseline average of 100 for April Each component measured is tracked quarterly to illustrate changes in advisor perceptions and changes in trends over time. Future surveys will sample different financial advisors and may produce different results. *The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The Consumer Confidence Index was started in 1967 and is benchmarked to 1985=100. The Index is calculated each month on the basis of a household survey of consumers opinions on current conditions and future expectations of the economy. Opinions on current conditions make up 40% of the Index, with expectations of future conditions comprising the remaining 60%. Before investing, investors should consider carefully the investment objectives, risks, charges and expenses of a mutual fund. This and other important information is contained in the prospectus and summary prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing. Advanced Investing 2018 Eaton Vance Distributors, Inc. Member FINRA/SIPC Two International Place, Boston, MA eatonvance.com Not FDIC Insured Not Bank Guaranteed May Lose Value