Recession Fears Send HNW Investors Seeking Shelter

March 2020

As the worldwide spread of the coronavirus prompts fears of a possible recession, high net worth investors are turning to their advisors for help shifting their money into safer investments, according to news reports.

Over half of investors working with an advisor are talking to them about the possibility of a recession and looking for “safer, lower-risk” investments for their assets, according to a Cerulli Associates study cited by FA-IQ sister publication FundFire.

Investors across the board have been moving assets into money market funds and bond strategies, Scott Smith, director of advice relationships at Cerulli, tells FundFire. But advisors working with HNW investors are also talking to clients about certain opportunities arising from turbulent markets, he says, according to the publication.

Some investors are shifting to “quality” fixed income assets, such as short-duration bonds, John Moninger, Eaton Vance’s managing director of retail sales, tells FundFire. Many advisors are shifting clients from traditional high-yield and bank loan bond funds into intermediate or core plus bond strategies, Heather Beamer, head of U.S. portfolio insights at JPMorgan Asset Management, tells the publication.

One concern, advisors warn, is becoming over-concentrated in fixed income, FundFire writes.

The Wall Street Journal reports that as stocks and oil prices plummeted Friday, investors looking to protect their assets drove yields on long-term Treasuries “to unprecedented levels.”

The yield on the 10-year Treasury note dropped below 0.7% for the first time, according to the paper. The yield on the 30-year Treasury note fell to 1.326%, the Journal writes.

“I think it would be a big mistake to buy into a lot of fixed income, with [interest] rates where they are now,” Jesse Clinton, a managing director with VERITAS Private Wealth Group at Snowden Lane Partners, tells FundFire. “The long-term perspective should really be [toward] equities if there’s room within your risk tolerance.”

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By Alex Padalka

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  • To read the Wall Street Journal article cited in this story click here if you have a paid subscription