Advisers adopted a positive attitude toward US equities at the start of 2017, with 56 per cent feeling bullish about the year ahead, according to the Eaton Vance Advisor Top-of-Mind Index (ATOMIX) survey, a quarterly survey of more than 1,000 financial Advisers.
Yet despite this optimism, "managing volatility" emerged as Advisers' top concern, rating 114.5 on the ATOMIX scale.
"Advisers see opportunity in equity markets, but are also aware of potential volatility and the macro challenges ahead," says John Moninger, managing director of retail sales at Eaton Vance. "As a result, they are working to find ways to manage risk while driving strong results for their clients."
Although concerned, Advisers appear poised to capitalise on the opportunities volatility presents, with 54 per cent saying volatility should be both managed to avoid losses and harnessed to take advantage of opportunities. However, their clients had a different view – only 32 per cent of Advisers said their clients agree with this approach. Instead, 48 per cent of Advisers said their clients believe volatility only should be managed closely to avoid losses.
This sense of caution aligns with broader investor sentiment. Advisers reported 60 per cent of their clients are motivated more by fear than greed. Although this fear indicator has declined from a high of 82 per cent in August 2016, fear remained the dominant motivator.
"The current climate of elevated political uncertainty brings more potential volatility to the market, which could be beneficial for investors in search of value opportunities," says Moninger. "Volatile markets provides Advisers the chance to really deliver value and support to clients by helping them navigate uncertainty and stay on course to meet their investment goals."
