Global Asset Allocation Views

Also Interesting

• Monetary Policy Report, July 13, 2018
• Investing in an Age of Uncertainty
• Index Dashboard: Europe

Themes and implications from the Multi-Asset Solutions Strategy Summit 1Q 2019

The economic outlook is reasonable, and the risk of recession in the next 12 months remains quite low; however, global growth reverted to trend more quickly than expected, U.S. monetary policy is tightening, and trade rhetoric is escalating—all of which represent downside risks. • Slowing economic momentum and tightening policy lead us to de-risk our multi-asset portfolios, most visibly by reducing stock-bond to a small underweight (UW). This continues down a gradual de-risking path that began in the middle of the year. • Within equities, we still most favor the U.S., least favor eurozone equities and bring emerging market equity to a small UW. We keep our small overweight (OW) to duration, and we raise our cash allocation to OW, specifically for USD cash, where real policy rates are edging to positive territory. We stay neutral on credit but note increased headwinds to fundamentals. This allocation mix is, in our view, appropriate for an environment of slowing earnings growth and rising macroeconomic risks.