US advisers shifting to international equities

Financial advisers in the US will increase allocations to actively managed non-US equity funds over the next six months, a new survey shows.

One-third (34%) of the 778 advisers canvassed by Advisor Perspectives said they will allocate 3% or more of funds to actively managed international equity funds.

Advisor Perspectives chief executive Robert Huebscher said the result is not surprising given that price-earnings multiples are lower in emerging and developed non-US markets than they are in the US.

"But fund companies should take note of the interest in actively managed funds, which may signal a reverse in the recent trend of asset flows from active to passive," he said.

By the same token, almost a third (30.4%) of advisers plan to increase allocations to traditional index funds.

Actively managed US domiciled equities however, remain attractive with 26.9% of advisers indicating they will invest more in these products in the next six months.

About 22.4% of advisers plan to increase their allocations to non-cap weighted or smart-beta funds, which was significantly more attractive than high-yield bonds, with only 6.1% of advisers planning to invest in this asset class.

A large portion (21.5%) were eyeing alternatives or commodities, overtaking the demand for environmental, social and governance (ESG) products, which only 122 advisers (15.6%) noted interest in.

Huebscher added analysis of the fund industry has been focused on dissecting trends in the historical flows of assets, and that fund managers are more interested in what advisers plan to do rather than what they have already done.

Read more: Advisor PerspectivesRobert Huebscher
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