Multi-Asset portfolio outlook, positioning, and attribution as of 03/31/2023

March 31, 2023


  • We see continued risk of slowing economic activity tied, in part, to the Fed’s aggressive monetary tightening, and elevated stress in the U.S. financial system resulting, in part, from aggressive monetary policy has exacerbated the late-cycle challenges to growth.
  • While headline data for some areas of the global economy remain sound, such as the U.S. employment and consumption, leading areas of the job market and reduced consumer savings suggest to us that the full impact of the Fed’s rate hiking cycle has yet to be felt.
  • In this evolving environment, we see significant risk to corporate earnings for the most economically sensitive parts of the markets.
  • We expect earnings growth to vary significantly across U.S. sectors in 2023, as is typical when risk of recession is elevated, and we believe sector allocation will be key to investment outcomes in the coming quarters.
  • Internationally, as global economic growth slows, we believe Europe still faces significant risks from monetary and fiscal tightening with a lower savings cushion to support consumers, and we expect slowing growth to present headwinds for economically cyclical emerging markets, while we see developed Asia as a relative bright spot.
  • While risks to equities have increased, risks to fixed income have diminished, in our view, following the sharp rise in interest rates last year, as slowing economic growth and a likely easing of inflation should reduce upward pressure on intermediate and longer-term interest rates, and a Fed-induced slowdown could ultimately push down longer-term interest rates.

Portfolio Positioning

  • Economic risks continued to rise, in our view, and we have further reduced economic sensitivity by reducing equity exposure and exiting broad commodities, while adding to fixed income, as fixed income and gold presented upside potential, in our view, due to the rise in real yields over the course of 2022.
  • Within equities, we are avoiding early-phase cyclical U.S. sectors and, instead, are emphasizing sectors that we expect will see less earnings deceleration and margin compression as economic growth slows, and we have continued to add to late-phase, defensive U.S. sector exposures, with overweights of Health Care, Consumer Staples, and Utilities.
  • We remain underweight to international equities, and particularly Europe and emerging markets, but we maintain an overweight of developed Asia, where we see potential resilience.
  • Within fixed income, we are emphasizing longer-term securities that should benefit from declining long-term interest rates, and we have increased Treasury exposure over the past year, which we believe could benefit amid a flight to perceived safe assets.

Q1 Attribution

Positive Contributors:


  • U.S. Communication Services Equities


  • U.S. Financials Equities
  • Fixed Income

Negative Contributors:


  • U.S. Health Care Equities
  • Real Assets
  • U.S. Utilities Equities

Attribution Analysis is relative to the Multi-Asset benchmark and was current as of the date specified in this presentation.

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’ Multi-Asset 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.

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