Asset Allocations: Continuing underweight to equities
Change from previous quarter
|U.S. large cap|
|U.S. small cap|
|U.S. investment-grade corporates|
|U.S. floating-rate bank loans|
|U.S. high yield|
|Non-U.S. developed country|
Currency viewsU.S. dollar versus
|Favor other||Neutral||Favor dollar|
We favor reduced equity risk
We have reduced our dynamic asset allocation risk overall. Despite the Fed’s many programs, we expect the heightened volatility environment to persist, resulting in lower risk-adjusted returns.
We have a very slight preference for high yield
Currently, we have a slight preference for high-yield credit over equity and a very slight underweight to duration. High yield looks more attractive as the Fed has ramped up support for corporate bonds in May and June through investments made by the Secondary Market Corporate Credit Facility.
Overweight to cash, neutral on commodities
There are plenty of risks that still need to be navigated over the balance of 2020.
July 14, 2020 | Capital Markets Outlook
Despite progress on the virus, we think the markets may stay unsettled and we favor reducing overall risk.More »