Financial advisors are generally bullish about the stock market in 2025, but the road might be bumpy, according to the results of a recent survey.
The InspereX Pulse 2025 Outlook Survey of 682 financial advisors, which was released Monday, shows that 67% of respondents anticipate a gain of at least 10% by the S&P 500 Index next year, while 14% of advisors expect a 20% gain for stocks.
An additional 2% of advisors expect the S&P to gain more than 20% in 2025.
Nearly 70% of respondents expect equities to be the best performing asset class of 2025, followed by cryptocurrencies, which was the choice of 11% of advisors.
The optimistic outlook is surprising against the backdrop of a more than 26% already this year by the SPDR S&P 500 ETF Trust (SPY), which comes on the heels of a 26% gain last year.
A key component of the findings is that the survey was conducted the day after it was announced that Donald Trump had been re-elected.
Chris Mee, managing director at InspereX, a Chicago-based fixed-income brokerage platform, said that while a combined 83% of advisors expect the stock market to be up again next year, many are also anticipating increased volatility.
“Over 80% of advisors said they expect the S&P to correct by at least 10% at some point next year,” he said.
More specifically, 33% see a drop of 10%, 31% forecast a drop of 15%, and 16% expect a bear market level drop of 20%.
That anticipation for increased volatility is illustrated by 31% of advisors who said they are looking to reduce risk by adding downside protection to client portfolios.
“Meanwhile, clients are expressing the lowest anxiety levels we’ve seen in four years,” Mee noted.
InspereX started conducting the surveys during the early days of Covid to get a sense for what might be ahead for the financial markets, and they have since been doing the surveys about twice a year.
Mee said the string of advisor surveys continues to paint a picture of how and where advisors and clients often see the world differently.
“Right now, the top concern of clients is inflation, and that was the number one concern of advisors two surveys ago,” he said. “And now the top concern for advisors in geopolitics, which is a low concern for clients.”
Mee reads the diverging concerns as “advisors being more forward-looking, while clients are focused on what’s happening to them right now.”
Asked about the future of the Federal Reserve’s monetary policy, 46% of advisors said they believe the Fed will eventually achieve a soft landing, meaning the U.S. economy will avoid a deep recession.
In terms of post-election concerns, the top three issues for advisors were geopolitics, inflation, and market volatility.
But when asked about the top concerns of their clients, advisors listed the order as inflation, followed by market volatility and the new presidential administration.
More than half of advisors said they would not make strategic changes to client portfolios based on the election results. Another 24% said they will add downside protection as a result of the election, 6% will be more conservative, while 17% said they will be more aggressive.
Permalink | © Copyright 2024 etf.com. All rights reserved
