Asset Allocations: Generally neutral allocations in early 2021

Current quarter Previous quarter Change from previous quarter	Underweight	Neutral	Overweight
Equity
U.S. large cap
U.S. small cap
U.S. value
U.S. growth
Europe
Japan
Emerging markets
Fixed income
U.S. government
U.S. investment-grade corporates
U.S. mortgage-backed
U.S. floating-rate bank loans
U.S. high yield
Non-U.S. developed country
Emerging markets
Commodities
Cash

Currency views U.S. dollar versus	Favor other	Neutral	Favor dollar
Euro
Pound
Yen

Risk assets have an edge

We see a strong cyclical recovery ahead and favor an overweight to risky assets.

See more manager videos or explore our Asset Allocation strategy

We favor large-cap U.S. equities

With neutral weightings in most equity categories, we see the potential for U.S. large-cap equities to continue to rise in early 2021.

We have dialed down high yield

We are also neutral on most areas of fixed income, and favor reducing the overweight to high yield from late 2020.

Increase to commodities

Given the unusual nature of the crisis, it will be important to have tactical flexibility and open-mindedness to the idea that the recovery is also likely to be unusual.

The market’s potential sugar high

January 14, 2021 | Capital Markets Outlook

Amid a likely tug-of-war between positive and negative economic news, we favor investing with a flexible approach.