Concerned About Market Valuation? Protect the Downside

The Vanguard S&P 500 ETF (VOO) was up 14% as of July 26, near its all-time high. With four months to go, VOO has already set a new calendar year record with $51 billion of net inflows. Yet, VettaFi believes many advisors are cautiously optimistic. In mid-July, VettaFi hosted a webcast for advisors in partnership with State Street Global Advisors. During the event we asked attendees a series of questions. One sought to learn what advisors were most concerned about. “Market valuations” topped the list of choices with 56%, ahead of the U.S. election and geopolitical tensions. The VettaFi poll took place before President Biden announced plan to not seek a second term.

What are you most concerned about for next 12 months

Despite the concerns, in a separate question advisors told VettaFi they still favored US equities. The US equities asset class received 51% of the vote for which was most appealing to add to client portfolios. International equities, US fixed income and gold garnered some but less interest. Many investors might initially think about reducing US stock exposure, despite finding them relatively appealing. We think a growing wave of new ETFs seeks to address the combination of these two sentiments.