2024 year-end Risk Speedometers: What are allocators buying and selling?

Despite advisors’ strong rebalancing efforts, robust equity returns suggest room to rebalance into fixed income

The Vanguard Investment Advisory Research Center’s latest Risk Speedometers offer new insights by analyzing cash flows into and out of asset categories for the 6- and 12-month periods ended December 31, 2024. The speedometers gauge the difference in net cash flow between higher-risk and lower-risk asset classes, providing a way to measure fund allocators’ risk appetite.

• Our findings indicate that investors and their advisors have continued to “stay the course.” In other words, fund allocators remained disciplined and rebalanced their portfolios—despite the strong equity returns in 2024, the equity bull market over the last two years, and strong equity returns in five of the last six years.
• This behavior is notably different from previous bear market recoveries and aligns with our Advisor's Alpha® research.
• Despite the strong rebalancing efforts by advisors during the past 5 to 10 years, equity returns have been so strong relative to fixed income that more work may still be needed. As we enter 2025, it is a good time for advisors to assess whether their clients' portfolios require rebalancing from equities into fixed income.

Being aware of the categories that are in or out of favor can help you when preparing for client conversations and providing context into what is selling well versus what is being sold in the marketplace. Read the full PDF for our complete analysis.

Notes

• All investing is subject to risk, including the possible loss of the money you invest.