Vanguard’s Investment Advisory Research Center reports that, as of December 2024, institutional allocators have maintained a balanced approach to risk, even amidst strong equity market performance. The firm’s “Risk Speedometers” indicate that while 6-month risk appetite has slightly declined, 12-month appetite has modestly increased, both remaining near long-term averages. This disciplined behavior suggests that investors are not overextending into riskier assets despite consecutive years of robust U.S. equity returns.
Risk Speedometers: What are allocators buying and selling?
Vanguard
Research
12 Pages
Key Takeaways
Balanced risk appetite observed: Allocators have kept risk exposure near historical norms, avoiding overextension into high-risk assets.
Strong U.S. equity performance: U.S. equities achieved over 20% returns in five of the past six years, excluding a 19% decline in 2022.
Underperformance in other markets: Non-U.S. equities and U.S. bonds lagged, with international equities up 5.5% and U.S. bonds returning 1.3% in 2024.
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