Global Balanced portfolio outlook, positioning, and attribution as of 9/30/2019
September 30, 2019
- 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.
- International economic growth has suffered this year, in part, due to weaker manufacturing activity in Germany and Japan.
- 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.
- 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.
- U.S. Consumer Staples Equities
- Corporate Fixed Income
- U.S. Energy Equities
- U.S. Health Care Equities
- U.S. Communication Services Equities
- U.S. Real Estate Equities