Summary
We have three strategic asset-allocation models, based on risk-tolerance levels: Conservative, Growth, and Aggressive. On a regular basis, we make tactical adjustments to the models, based on our outlooks for the various segments of the capital markets. In terms of performance through April, bonds are outperforming stocks based on expectations for a slowing economy. From an asset-allocation standpoint, our Stock/Bond Barometer model still slightly favors bonds over stocks for long-term portfolio positioning. In other words, these asset classes should be near their target weights in diversified portfolios, with a slight tilt toward bonds. We are over-weight on large-caps at this stage of the market cycle. We favor large-caps for growth exposure and financial strength, amidst the volatility. Our recommended exposure to small- and mid-caps is 10% of equity allocation, below the benchmark weighting. Global stocks have taken an early performance lead in 2025, although U.S. stocks have outperformed their global peers over the trailing one- and five-year periods. We expect this long-term trend favoring U.S. stocks to return, given volatile global economic, political, geopolitical, and currency conditions. That said, international stocks offer favorable near-term valuations, and we target a
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