2023 year-end risk speedometers: What are allocators buying and selling?

Vanguard's Investment Advisory Research Center has released its latest Risk Speedometers, providing valuable insights into industry trends. These speedometers measure the difference in net cash flow between higher-risk and lower-risk asset classes, giving a glimpse into the risk appetite of fund allocators.

One key finding: The six-month risk appetite has increased, although it remains below the long-term mean. On the other hand, the 12-month risk appetite has dropped. This suggests that allocators are making capital allocation decisions that reflect rebalancing activity rather than trend-following or performance-chasing.

By staying informed about industry cash flows and asset allocations, advisors can provide valuable guidance and behavioral coaching to their clients.

For more key insights, check out the full report from Vanguard's Investment Advisory Research Center.

Notes

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