Global Conservative portfolio outlook, positioning, and attribution as of 9/30/2019
September 30, 2019
Outlook
- We expect global economic growth will remain positive in the near term, but that markets will remain volatile.
- The U.S. economic cycle is maturing – we expect U.S. economic growth to remain positive, but below trend, in the near-to-intermediate term as consumer strength is partly offset by weakness in manufacturing.
- Federal Reserve’s two recent short-term rate cuts should help normalize the yield curve but are unlikely to spur a sustained reacceleration of economic growth.
- International economic growth has suffered this year, in part, due to weaker manufacturing activity in Germany and Japan.
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.
- While we still see better opportunities in Asia than Europe, we continue to underweight international equities as a whole.
- With continued late-cycle growth and low absolute yields, we still favor corporate bond exposure in the strategy’s fixed-income allocation.
Q3 Attribution
Positive Contributors:
Overweight
- U.S. Consumer Staples Equities
- Corporate Fixed-Income Securities
Underweight
- Intermediate-Term Fixed-Income Securities
Negative Contributors:
Overweight
- U.S. Health Care Equities
Underweight
- Short-Term Fixed-Income Securities
- U.S. Real Estate Equities
Attribution Analysis is relative to the Global Conservative 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 Conservative 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.