Equity versus Fixed Income (Target = Middle)
We recommend a neutral position to equity and fixed income. We believe the bull market in stocks will continue. However, rising policy uncertainties increase the risk of ongoing bouts of volatility, supporting the case for proactive rebalancing.
Domestic Versus International (International target = High)
We maintain our overweight international allocation. Faster growth in the U.S. and sustained signs of a synchronized global rebound offer support for continued international outperformance. We expect domestic investments to deliver positive returns, but recommend a reduced allocation given economic challenges and domestic sector imbalances.
Asset Class Diversification:
Investing in equities involves risks. The values of your shares will fluctuate and you may lose principal. Special risks are inherent to international and emerging-markets investing, including those related to currency fluctuations and foreign political and economic events.