Global Balanced portfolio outlook, positioning, and attribution as of 6/30/2019
June 30, 2019
- The U.S. economic expansion continues. Despite slowing growth and early signs of economic impact from international trade tensions, we still view moderate growth as likely in the near-term.
- The current, partially-inverted shape of the yield curve is unsustainable, in our view, and some reduction in short-term rates seems the most likely path toward rate normalization.
- International economic growth has suffered this year, in part, due to weaker manufacturing activity in Germany and Japan.
- We believe the maturing economic cycle warrants exposure to U.S. equity sectors with a mix of cyclical and secular drivers, such as Info. Tech. and Comm. Services, as well as less economically-sensitive sectors, like Consumer Staples, Health Care, and Utilities.
- We eliminated U.S. Financials equity exposure in light of slowing economic growth and the evolving interest rate environment.
- An underweight of international equities reflects the relative attractiveness of the select U.S. exposures as international economic growth continues to struggle against structural challenges, cyclical patterns, and headwinds to global trade.
- With increased likelihood of Fed rate cuts, we have de-emphasized shorter-duration fixed-income securities.
- U.S. Information Technology Equities
- U.S. Communication Services Equities
- U.S. Energy Equities
- Short-Duration Fixed Income
- U.S. Financials Equities
- Western European Equities