Advisors favor active management to navigate volatile markets, PGIM study finds

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NEWARK, NJ, September 7, 2021– (BUSINESS WIRE) – With turbulent markets reflecting both optimism and uncertainty about an ongoing recovery, financial advisors are relying heavily on actively managed strategies to navigate the way forward, according to a new survey by PGIM Investments of more than 500 financial advisers. PGIM Investments is part of PGIM, the $ 1.5 trillion global investment management firm of Prudential Financial, Inc. (NYSE: PRU).

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Stuart Parker, President and CEO of PGIM Investments (Photo: Business Wire)

The survey found that advisors allocate a substantial percentage of client assets to active management (62%), while leaving room for passive strategies (34%). They expect this allocation to remain largely the same over the next three years. Advisors also shared the following beliefs about active management:

“What we have discovered through our research and experience is that financial advisors continue to use a mix of assets and liabilities, but rely more on actively managed solutions within the portfolios of clients, ”said Stuart Parker, President and CEO of PGIM Investments. . “The ability to generate alpha for clients, especially during times of market volatility, is essential.”

Advisors prefer active management to achieve most investment goals

The PGIM survey also found that advisors prefer active management to achieve most investment goals, including:

  • Access the opportunities of emerging markets.

  • Protection against market downturns.

  • Provide risk-adjusted returns.

  • Generate reliable income.

The management of tax liability is the only case where advisers have shown a slight preference for passive management.

How advisors are positioning client portfolios for a pandemic and beyond

Given the devastating impact of the pandemic on global economies and markets, it’s no surprise that most advisors (76%) say COVID-19 is influencing the way they build their clients’ portfolios by 2021. About two-thirds (68%) indicate that stock market volatility is their main concern. portfolio management concern. Additional results include:

  • Investment vehicles: While almost all financial advisors (98%) currently use and likely will continue to use mutual funds, over the next three years 65% plan to use more exchange-traded funds (ETFs) and 41% plan to use mutual funds. greater use of separately managed accounts.

  • Asset allocation: As expected, advisors use a combination of asset classes in client portfolios, including US, international and emerging market equities; bond and alternative strategies. Over the next three years, the advisers plan to increase equity allocations in international / global and emerging markets.

  • Yield research: Within fixed income, advisors see high yield bonds, investment grade corporate bonds and emerging market debt as the top three opportunities for yield generation in 2021.

  • Environmental, Social, Governance (ESG): Two-thirds (66%) of advisors say their average client is at least somewhat familiar with ESG investing, and more than half (54%) plan to increase allocations to ESG strategies over the next three years.

Read the full report, In Search of Active Advantage in Uncertain Times, for detailed search results.

ABOUT THE SURVEY

This survey of 509 American financial professionals who sell mutual funds, ETFs and / or target date funds was conducted by Escalent on behalf of PGIM Investments between January 27 and February 19, 2021. interviewees met the following criteria: Have an up-to-date work book; are between 28 and 65 years old; Possess a professional license Series 6 and / or 7; At least 3 years of experience as a licensed investment professional; Assets Under Management (AUM) of at least $ 25 million.

ABOUT PGIM INVESTISSEMENTS

PGIM Investments LLC and its affiliates offer more than 100 funds globally across a wide range of asset classes and investment styles. All products are backed by PGIM’s globally diverse investment platform which encompasses the expertise of managers in fixed income, equities, alternatives and real estate.

ABOUT PGIM

PGIM, the global asset management business of Prudential Financial, Inc. (NYSE: PRU), ranks among the top 10 asset managers in the world1 with over $ 1.5 trillion in assets under management as of June 30, 2021. With offices in 16 countries, PGIM’s activities provide a range of investment solutions for retail and institutional investors around the world through a broad range of asset classes including public fixed income, private fixed income, fundamental stocks, quantitative stocks, real estate and alternatives. For more information on PGIM, visit pgim.com.

Prudential Financial, Inc. (PFI) of the United States is not affiliated in any way with Prudential plc, incorporated in the United Kingdom, or Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. For more information, please visit news.prudential.com.

1 Prudential Financial, Inc. (PFI) is the 10th largest investment manager (out of 477) in terms of global assets under management based on the Pensions & Investments Top Money Managers list published on May 31, 2021. This ranking represents assets managed by PFI as of December 31, 2020.

This material is provided for informational or educational purposes only and does not take into account the investment objectives or financial condition of any client or potential client. The information is not intended as investment advice and does not constitute a recommendation. Clients seeking information regarding their particular investment needs should contact a financial professional.

© 2021 Prudential Financial, Inc. and its related entities. PGIM and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions around the world.

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