More than 80 percent of investment advisors are currently using tactical and alternative investments or said they would likely recommend them to clients in 2013, according to a survey by Capital Management Group, an SEC-registered investment advisor in King of Prussia, Pa.
The survey, which was conducted at the annual Financial Planning Association Experience 2012 Conference in San Antonio, also showed that fewer than one-quarter of advisors still use the traditional 60-40 stock/bond allocation.
"The returns of many traditional investments and strategies have been volatile and disappointing for most investors," said CMG Managing Director and Head of Distribution Michael Sciortino, Sr. "This survey shows that the advisor community is overwhelmingly embracing tactical strategies to provide investors with a smoother, steadier investment experience."
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Tactical strategies are designed to create value, particularly in volatile or uncertain markets, by providing exposure to low or non-correlated assets. According to the survey, 87 percent of advisors now believe a portfolio constructed using both tactical and strategic allocations offers more value than a portfolio that doesn't invest in both.
"As more investors become familiar and comfortable with tactical strategies we believe the assets will grow dramatically," Sciortino said. "Advisors are extremely interested in ways of using tactical investments to successfully navigate the challenges of the investment world by utilizing liquid, transparent and cost-effective tools like ETFs and mutual funds."
The one roadblock advisors encounter when discussing tactical investments with their clients is basic familiarity. Seventy percent of advisors believe that lack of understanding of tactical solutions is still a barrier for their clients, the survey found.
Tactical strategies, which were only used by institutions and high net worth investors in the past, are now being used by typical advisor clients. The survey found that an advisor with less than $50 million under management was just as likely to utilize tactical investments as advisors with $250 million or more under management.
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