This too shall pass

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2018 was a difficult year for asset allocators, especially those based in USD. Investors are less confident than a year ago, which may be a good sign. Much depends on the economic cycle. A year ago, we wrote about 2017 being the last hurrah for investors and that appears to have been the case (see 2017: the last hurrah!). The 15.7% USD total return on our Neutral portfolio during 2017 (7.3% in local currency) was followed by a disappointing -4.7% in 2018 (-3.3%). The Neutral portfolio is a static mix of global cash, fixed income, equity, real estate and commodity assets (see Figure 6 for weightings).