Midyear 2023 Risk speedometers: What are allocators buying and selling?

Vanguard’s Investment Advisory Research Center Risk Speedometers, which were developed by the creators of Advisor’s Alpha® in 2016,¹ are intended to inform advisors of industry trends. The Risk Appetite Speedometer measures the difference in net cash flow between higher-risk asset classes and lower-risk asset classes to gauge the level of risk fund allocators are taking relative to their prior levels and their longer-term averages.

The data and analysis in this report provide a basis through which you can:

• Understand industry cash-flow trends and their meaning within the context of relative market performance.
• Evaluate whether your portfolio construction decisions (cash flows and asset allocations) are correlated or uncorrelated to those managing portfolios—and to what degree.
• Have effective, well-informed, conversations with your clients on what they may be hearing or reading about. Knowing the broader market trends enables you to strengthen client relationships by reaching out to your clients with information, guidance, and behavioral coaching moments.

1 In 2022, this team was renamed the Investment Advisory Research Center, and their sole focus is to support advisors in their efforts to maximize after-tax advised client outcomes.

Notes

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