Global Balanced portfolio outlook, positioning, and attribution as of 12/31/2019
December 31, 2019
Outlook
- We anticipate positive economic growth and market returns in 2020, though moderate growth faces risks and equity returns are unlikely to match 2019 levels.
- We expect global equity returns in 2020 to be driven by moderate earnings growth, as valuations are at cyclical highs, and we expect increased volatility, along with increased dispersion among sector performance.
- International economies and markets still face uncertainty from Brexit and the ongoing U.S./China trade dispute – a limited trade deal is unlikely to bail out EM Asia and other trade-dependent regions.
- Interest rates are historically low, and while modest inflationary pressures may support some upside to longer-term rates, we do not anticipate aggressive easing by the Fed that would lower short-term interest rates materially.
Portfolio Positioning
- We believe the maturing economic cycle warrants exposure to U.S. sectors with a mix of cyclical and secular drivers.
- We continue to avoid U.S. sectors with some of the highest economic sensitivity, such as Industrials, Materials, and Energy.
- We remain underweight international equities, given continued macroeconomic headwinds abroad, and have further reduced exposure to emerging Asia, where expanded valuations seem overly optimistic amid ongoing trade friction.
- With continued late-cycle growth and low absolute yields, we still favor investment grade corporate bond exposure in the strategy’s fixed-income allocation.
Q4 Attribution
Positive Contributors:
Overweight
- U.S. Information Technology Equities
- Inv. Grade Corp. Fixed-Income Securities
Underweight
- U.S. Treasury Securities
Negative Contributors:
Overweight
- U.S. Consumer Staples Equities
Underweight
- Emerging Asia Equities
Attribution Analysis is relative to the Global Balanced benchmark and was current as of the date specified in this presentation. A complete attribution report is available upon request.
The most recent complete presentation can be viewed here.
Any portfolio characteristics, including position sizes and sector allocations among others, are generally averages and are for illustrative purposes only and do not reflect the investments of an actual portfolio unless otherwise noted. The investment guidelines of an actual portfolio may permit or restrict investments that are materially different in size, nature and risk from those shown. The investment processes, research processes or risk processes shown herein are for informational purposes to demonstrate an overview of the process. Such processes may differ by product, client mandate or market conditions. Portfolios that are concentrated in a specific sector or industry may be subject to a higher degree of market risk than a portfolio whose investments are more diversified.
Holdings, Sector Weightings and Portfolio Characteristics were current as of the date specified in this presentation. The listing of particular securities should not be considered a recommendation to purchase or sell these securities. While these securities were among WestEnd Advisors’ Global Balanced holdings at the time this material was assembled, holdings will change over time. There can be no assurance that the securities remain in the portfolio or that other securities have not been purchased. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities presently in the portfolio. Individual clients’ portfolios may vary. Upon request, WestEnd Advisors will provide a list of all recommendations for the prior year.