VettaFi’s vice chairman Tom Lydon joined Yahoo Finance Wednesday to discuss advisor survey data. VettaFi regularly surveys advisors to gauge their confidence in various asset classes and their risk tolerance. With the Fed perhaps done with rate hikes, Lydon emphasized that advisors are no longer as concerned by inflation. While two years ago most advisors cited inflation as their biggest fear, that has since changed.
“Two-thirds said that that was keeping them up at night,” Lydon said. “Now, it’s only 16%, their biggest fear is recession. Most feel that the recession is going to be kind of a soft landing.”
Markets are usually kind to investors in the period between the last rate hike and the first rate cut, Lydon added. That could boost the case for small and mid-cap stocks overshadowed by the S&P 500.
In fixed income, Lydon reiterated that the 60/40 has come back to life. While short duration is paying, some advisors are now pushing toward longer duration in intermediate-term bonds. Investors can pick an ETF like the Vanguard Intermediate-Term Corporate Bond ETF (VCIT ), he added, for appreciation and higher yield.
VCIT charges just four basis points and has outperformed its ETF Database Category and Factset Segment averages YTD. The ETF has also added $368 million in net inflows over the last month.
The advisor survey data did call to mind one particular piece of advice for other advisors and investors, Lydon said. Following a bad market year in 2022, investors shouldn’t wait too long to get back into the market and diversify. That means looking outside of the S&P 500 into mid-cap, small-cap, and foreign, overseas equities offering notable value.
“I think the water feels better than it did last year,” Lydon said. “Get back to a long-term allocation. If you got scared last year, don’t wait till your stomach tells you that it’s okay to go back in.”
For more news, information, and analysis, visit the Fixed Income Channel.