Portfolio Management Returns as Top Focus for Advisors, According to Latest Fidelity® Survey

Advisors Increasingly Focused On What They Can Control: Building a Robust Portfolio Management Process to Help Protect Clients from Volatility and Downside Risk

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BOSTON — Portfolio management is the No. 1 priority for advisors, after ranking No. 2 last quarter, according to the latest quarterly Fidelity® Advisor Investment Pulse survey. In a sign that advisors are becoming less concerned over things they can't control, concerns about market volatility and the equity market level tied for the No. 2 ranking, and attention to the government and economy dropped to No. 4 after topping the list for the past four quarters. The latest results of the quarterly survey were released today by Fidelity Institutional Asset Management®, a distribution and client service organization dedicated to meeting the investment needs of financial advisors, institutional investors and consultants.

"As advisors continue their focus on protecting clients from a possible market correction and downside risk, they should consider long-term and diversified strategies for portfolio construction," said Bob Litle, head of Intermediary Sales, Fidelity Institutional Asset Management. "Given the challenges and complexity of today's environment, advisors who have a consistent approach in making investment decisions with their clients have the potential to create efficiencies in their practices and help investors reach their goals."

With the number of investment options ballooning over the past few decades, choosing investment vehicles for a portfolio has become more challenging. This presents an opportunity for advisors who have in place an effective due diligence process to differentiate themselves.

"We've observed that successful advisors focus on their framework for evaluating strategies and matching them to clients' objectives as much as they focus on the products," added Litle.

With a range of options to choose from, a well-constructed approach to building portfolios may help bolster advisors' confidence in selecting and combining investments. In addition to using commonly referenced investment selection criteria – such as parent, people, process, performance, and price – advisors can evolve their portfolio construction approach by using a framework that considers how various investment combinations work together. Investment manager selection within a comprehensive portfolio could focus on how the portfolio's building blocks interact with one another. To do so, think about building a sports team. Instead of picking the best players like an all-star game, choose players that work well together and create a winning team. In the context of portfolio construction, consider managers that have the potential to add value within a diversified portfolio. Advisors should also keep the following in mind:

  • Consider a mix of active and passive investments to help balance the risk tolerance and potential outperformance according to client preferences.
  • Don't constrain yourself to style-pure managers, or those with constant weightings to a certain style, market capitalization, or factor, such as momentum, quality, or low volatility. Advisors may complement a portfolio with other choices that pursue opportunities across styles and exposures.

"A portfolio construction approach that focuses on a client's overall portfolio can help advisors examine the underlying exposures of all investments – and pursue opportunities to create that 'championship' team," said Litle.

Resources for Advisors

Fidelity Institutional Asset Management offers advisors original insights aimed at addressing their top concerns. The resources may be used to support client discussions on managing inflation risk. To access these insights, visit institutional.fidelity.com/investmentpulse (for financial advisors only).1 Resources include:

  • Building the Right Team for Your Client Portfolios – A deliberate and repeatable manager selection approach can help you build an investment team and your clients' portfolios.
  • The Power of "AND" – Get Fidelity’s thinking on portfolio construction incorporating both active and passive strategies in your clients’ portfolios.
  • The Evolution of Portfolio Construction – Uncover the 5 myths and realities of portfolio construction.
  • Why Active Now in U.S. Large-Cap Equity – With changing economic and market conditions, the time may be right for actively managed U.S. large-cap funds to take the lead.

The Fidelity Advisor Investment Pulse is a survey that captures the investment topics on the minds of advisors in order to identify common concerns and deliver resources to help them navigate changing market conditions. Fidelity has been tracking advisor sentiment about investing concerns and opportunities since April 2012. This proprietary research enables Fidelity to provide advisors with timely perspectives from their peers, and offer tools to take advantage of the investment opportunities that exist today.

About the Fidelity Advisor Investment Pulse

The Advisor Investment Pulse is an ongoing primary research effort that captures the views of Fidelity Institutional Asset Management advisor clients. All Fidelity Institutional Asset Management advisor clients in the broker-dealer and registered investment advisor communities are asked to participate in the online survey. In Q3 2017, 123 advisors participated in the survey. These advisors serve a range of clients, including individual investors, businesses, plan sponsors and institutions. Respondents are asked an open-ended question: "Thinking about the investing environment and outlook, and the potential impact on your client portfolios, what investment challenge or opportunity would you say is top-of-mind for you right now?"

The survey reports top-of-mind themes of most concern to financial advisors in both their practices and in the financial markets. These themes are distilled from individual financial advisor comments. The chart reflects the most current five themes that represent the most widely held views. Given the variability of the number of responses over time, and the ongoing nature of this effort, confidence levels will also be variable.

About Fidelity Institutional Asset Management®

Fidelity Institutional Asset Management® (FIAM®) is one of the largest organizations serving the U.S. institutional marketplace. It works with financial advisors and advisory firms, offering them resources to help investors plan and achieve their goals; it also works with institutions and consultants to meet their varying and custom investment needs. Fidelity Institutional Asset Management provides actionable strategies, enabling its clients to stand out in the marketplace, and is a gateway to Fidelity’s original insight and diverse investment capabilities across equity, fixed income, high-income and global asset allocation.

Fidelity Institutional Asset Management is a division of Fidelity Investments.

About Fidelity Investments

Fidelity’s mission is to inspire better futures and deliver better outcomes for the customers and businesses we serve. With assets under administration of $6.5 trillion, including managed assets of $2.4 trillion as of September 30, 2017, we focus on meeting the unique needs of a diverse set of customers: helping more than 26 million people invest their own life savings, 23,000 businesses manage employee benefit programs, as well as providing more than 12,500 financial advisory firms with investment and technology solutions to invest their own clients’ money. Privately held for 70 years, Fidelity employs more than 40,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit https://www.fidelity.com/about.

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