Advisors Look For Positive Market Returns in '04

June 4, 2004 ( - After heady market gains in 2003, investment advisors say their clients are ground in reality, even if some advisors are shooting for the stars.

Most investment advisors (61%) say their clients expect and will be satisfied with returns between 6% and 10%, while 14% said their clients are happy so long as their portfolios are kept out of the red.   Only 11% of investment advisors say their clients are looking for investment returns in the double-digits to be satisfied, according to a survey of 124 investment advisors conducted by S&P Select SPDRs.

“We’re seeing a dramatic shift in investor expectations from the unsustainable returns reflected in investor polls just a few years back,” said Dan Dolan, chief of the Select Sector SPDRs Trust.  “Even though investor expectations are now close to historic market returns, advisors and their clients are still looking for investments that can add value to a portfolio.” 

More than half (57%) of the advisors polled are optimistic about the potential for a positive return in 2004, even if not at 2003’s levels. Fifteen percent of advisors though have gotten a taste of the good life after 2003, and are expecting similar gains in 2004, while 21% are on the other side, saying they are “uncomfortable” about the market despite gains in 2003.

Polled by S&P Select SPDRs – which provides exchange traded funds (ETF) – about the vehicle advisors plan to use to get their clients into the returns their expecting, over 80% say their clients are interested in non-traditional investments as a supplement to their core equity and bond portfolio.   Of particular interest are:

  • REITs and REIT Funds (70%)
  • ETFs (62%)
  • Sector Exchange Traded Funds (26%)
  • Hedge Funds (19%).

One thing that apparently not hampering investment efforts is the mutual fund scandal.   One quarter of advisors said they “are not especially concerned about the scandal,” with most thinking that the problems are company-specific, not industry wide.   Forty-two percent think that the news media has blown the scandal out of proportion.   However, 33% of advisors say they have an “average” concern, with the scandal focusing one-quarter of them on fees and policies that they don’t like.   The remaining 42% are “quite upset.”