Other economic findings:
- 80 percent (up from 71% in January) feel that the housing market will continue to soften in the next six months
- 57 percent (up from 40% in January) say it's unlikely that energy prices will go down
- 53 percent (up from 45% in January) say inflation will increase in the next six months
- 37 percent (up from 29% in January) say it's unlikely that consumer spending will increase
Although advisors expressed less enthusiasm for the U.S. economy overall, more advisors say it will be easy to achieve their clients' goals - 29 percent versus 21 percent in January - during the next six months. "Independent advisors tend to take a long-term view, which may explain why their confidence is on the rise during this time of market uncertainty," said Charles Goldman, executive vice president of Schwab Institutional. Goldman also noted that fewer clients of advisors needed reassurance during the past six months - 12 percent versus 15 percent in January.
Advisors see opportunities in a number of market sectors and investment products. Forty-four percent of advisors name energy as the top performing sector for the next six months, a leap from its #5 spot in January. At 34 percent, information technology (ranked #2 in January and July) and healthcare at 33 percent (#1 in January and now at #3) round out advisors' top sector picks. Financials, the #3 sector pick in January at 34 percent, fell to #7, with just 17 percent of advisors citing it as a future top performing sector.
On the product side, ETFs are the investment vehicle of choice, with 78 percent of independent advisors using them today. Of these advisors, 32 percent say they'll allocate more to these vehicles over the next six months. Only 19 percent of advisors indicated that they will not begin to invest in ETFs in the near future.
Advisors' fondness for ETFs stands in stark contrast to their ambivalence about alternative vehicles such as private equity and hedge funds. Only 32 percent of advisors currently invest in private equity deals; of these advisors, only seven percent plan to invest more over the next six months. Sixty-five percent of advisors have no plans to step into the private equity arena with investor assets in the near future. Similarly, only 31 percent of advisors currently invest in hedge funds, with eight percent planning to invest more in the next six months. Sixty-six percent of advisors say they have no plans to invest their clients' assets in hedge funds.
"Even subtle shifts in advisors' investment perspectives are interesting to watch," remarked Goldman. He pointed out that advisors aren't of one mind, noting that while 16 percent of advisors say they'll increase their cash holding in the next six months (up from 11% in January), the same number (16%) say they want more exposure to mutual funds with hedging strategies.
