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Short-term tactical outlook

Market Outlook Dec 2018

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

Overall positions

Equities

Fixed income

Alternatives

Cash

Key Takeaways

  • Prospects are improving for emerging market equities. Emerging markets have underperformed other equity regions for most of 2018. But recently, trade tensions are starting to abate, and this could be helpful for the asset class.
  • We have removed our overweight in U.S. equity. We had previously shifted to an overweight in U.S. equity to take advantage of a buying opportunity caused by market volatility. We’re now returning to a more neutral position.
  • We prefer equities over fixed income. Even if credit-sensitive fixed-income markets do well, we think equities are a more appealing option when it comes to risk exposure.

Within equities

 

 

Within fixed income

 

 

Within alternatives

 

 

 

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.