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Short-term tactical outlook

Market Outlook May 2018

A snapshot of current views on equity, fixed-income and alternative asset classes β€” updated monthly to help you tactically adjust for opportunities and risks.

Overall positions

Equities

Fixed income

Alternatives

Cash

Key Takeaways

  • Equities have had lower returns and higher volatility than last year. However, corporate earnings were exceptionally strong in the first quarter, and we don’t expect a recession this year.
  • We’re favoring a slightly higher fixed-income duration profile than last month. Recent increases in bond yields around the world are providing some cushion for bonds against the upward pressure on inflation.
  • We’re modestly overweight to alternatives. Lately, they’ve helped diversify portfolios against rising interest rates.

Within equities


Within fixed income

Within alternatives

Within alternatives


Currency

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Jeffrey L. Knight

Global Head of Investment Solutions and Co-Head of Global Asset Allocation

Jeff Knight leads the Global Asset Allocation Team, a dedicated group of investment professionals who manage asset allocation portfolios. The team evaluates economic conditions, market opportunities and risks across the global landscape to determine asset allocation views.

Disclosures

Alternative investments involve substantial risks and are more volatile than traditional investments, making them more suitable for investors with an above-average tolerance for risk. Foreign investments subject the fund to risks, including political, economic, market, social and others within a particular country, as well as to currency instabilities and less stringent financial and accounting standards generally applicable to U.S. issuers. There are risks associated with fixed-income investments, including credit risk, interest rate risk, and prepayment and extension risk. In general, bond prices rise when interest rates fall and vice versa. This effect is usually more pronounced for longer term securities.

Diversification does not assure a profit or protect against loss.