Defensive Approach and Regional Bias toward Emerging Markets

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Global Asset Allocation for Q2 2023: Defensive Approach and Regional Bias toward Emerging Markets

The economic cycle analysis suggests a contraction phase, leading to a more defensive approach with more cash and less risk.

Within the Model Asset Allocation, the cash allocation is increased to the maximum, and gold, equities, and real estate are reduced. The report also highlights a regional bias toward emerging market assets. Despite the projection of risk being rewarded in the next 12 months, the rewards may not compensate for the extra risk. Therefore, cash, investment grade credit, and high yield credit are favored.

The report assumes that global GDP growth will slide, inflation will fall but remain above many central bank targets, and major Western central banks are approaching the end of their tightening cycles. The report concludes that the uncertainty justifies the defensive approach. To read the complete research report, click on “read report.”