Financial Portfolios Adapt to Inflation, Rough Markets

By James Kelly, CFA®, CFP®, CAIA - Kevin McCullough, CFA®



Financial portfolio consultants James Kelly and Kevin McCullough discuss how financial advisors’ portfolio allocations have adapted to address persistent inflation and challenging market conditions for stocks and bonds.
  • Financial portfolio allocations seek to hedge against persistent inflation, despite the possibility that inflation may have peaked.
  • Advisors generally favored US value stocks, which continued to outperform growth stocks throughout 2022, although all broad stock indexes declined.
  • Positive returns were difficult to come by – except in alternatives, notably managed futures.
  • Allocations to alternatives rose, hitting their highest level in five years, at close to 7% in the portfolios that were reviewed.
  • Regardless of what steps the Federal Reserve may take on interest rates, alternatives may offer potential sources of diversification and return.
  • In fixed income, advisors started to move back into some of the longer duration areas and higher quality, where 3% and 4% yields are now more available than they were a year ago.
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This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted. Actual results may vary. The views and opinions expressed may change based on market and other conditions.

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