Advisors prefer active management to navigate turbulent markets: PGIM

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  • Advisors allocate 62% of client assets to actively managed investments, 34% to passive strategies and 4% to cash.
  • Most respondents said that there are active, skilled equity and fixed income managers who consistently outperform their benchmarks.
  • Virtually all advisors will continue to use mutual funds over the next three years, and 65% plan to use more ETFs.

As the recovery from the pandemic continues, financial advisers of a new investigation of PGIM Investments report that they allocate 62% of client assets to actively managed investments, 34% to passive strategies and 4% to cash. They expect these proportions to stay roughly the same over the next three years.

The survey found that advisors prefer active management to achieve almost all investment goals, including:

  • Access to emerging market opportunities: 80%.
  • Protection against market downturns: 79%.
  • Provide risk-adjusted returns: 70%.
  • Reliable income generation: 70%.

It is only in the management of tax liability that a majority of advisers, 52%, preferred passive management.

“What we have discovered through our research and experience is that financial advisors continue to use a mix of assets and liabilities. [strategies] but rely more on solutions actively managed within client portfolios ”, Stuart parker, chairman and chief executive officer of PGIM Investments, said in a statement.

“The ability to generate alpha for clients, especially during times of market volatility, is critical.”

For advisors who evaluate active managers, performance matters. A large majority of those surveyed said that there are active, skilled equity and fixed income managers who consistently outperform their benchmarks. Over 80% said fee reductions make active managers more attractive than they used to be.

Escalent conducted a survey between Jan. 27 and Feb. 19 of 509 U.S. financial professionals who sell mutual funds, ETFs, or target date funds. Participants had current business volume, were between 28 and 65 years old, held a Series 6 or 7 professional license and at least three years of experience as a licensed investment professional, and had assets under management of at least $ 25 million.


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