199804652K LEI: 549300JX6BNKEHZFQE44, TEL: (858) 436-2200 FAX: (858) 436-2201, TEL: 612-9279-1771 FAX: 612-9279-2580, ABN 54 084 280 508 AFS Licence 246862 LEI: 549300RE60KX7TX1DZ43, TEL: 813-5777-8150 FAX: 813-5777-8151, TEL: +1 416 368 3350 FAX: +1 416 368 3576, Registered in Switzerland, Company No. Insights and implications from the Multi-Asset Solutions Strategy Summit. It is not intended to be investment advice or a recommendation to take any particular investment action. Chart shows 2020 fiscal measures as a percentage of each country or region’s gross domestic product. In Japan, fiscal policy will likely remain accommodative, and we expect additional stimulus of approximately 3% of GDP equivalent discretionary spending to focus on service sector/public investment over a 15-month budget (January 2021 to March 2022). Market outlook 2021: Evan Brown, head of macro asset allocation at UBS Asset Management told investors there’s the more positive news around vaccine announcements and this would boost global GDP next year. Asset allocation basically means portfolio diversification. Year 2021 should focus more on asset allocation Year 2021 starts on the back of a tumultuous 2020. We see opportunities to invest for economic recovery, while maintaining an emphasis on resilient portfolios. Our base case is that the pace of the recovery will be gradual, but the trajectory of the pandemic and the magnitude of additional policy support for fragile economies have the potential to stall or accelerate the recovery. Asset Allocation 2021 could be a better year for UK equities Asset Allocation Update. In our mid-year asset allocation outlook, we observed that despite the massive shock to the real economy, valuations of risk assets appeared close to fair after taking into account the impact of lower discount rates and extraordinary policy support. There were many other firsts: Oil prices temporarily became negative, volatility (VIX) surpassed levels observed during the depth of the global financial crisis, and already robust central bank balance sheets ballooned $7 trillion more. Kalpesh’s investment mantra for 2021 -Take adequate insurance: health and life plans. In 2021, we expect the global economic recovery to provide a tailwind for risk assets. The ideal goal with proper asset allocation is to maximize the risk-adjusted returns of a portfolio, and tailor its growth potential and risks for an individual investor’s needs and goals. Check the background of this firm on FINRA's BrokerCheck. Tactical asset allocation updates for January 2021. Significant monetary and fiscal support has already been unleashed as policymakers were quick to respond earlier in 2020 (see Figure 1). We anticipate that UK mid- and large-cap equities will fare much better in 2021 than they have in 2020, provided vaccines prove effective in winning the battle against COVID-19. We have increased exposure to cyclically oriented sectors and regions that have potential to benefit as economic activity picks up, while continuing to focus on industries where technological advancements are likely to lead to disruption over the secular horizon. Source: MSCI, FactSet estimates, Bloomberg, and PIMCO calculations as of 31 October 2020. We actively seek opportunities to capitalize on this theme, but we remain highly selective on where we obtain the desired cyclical exposure. The Fed’s commitment to overshoot its inflation target is supportive for equities, which look attractive given what is likely to be an extended period of negative or low real yields. 12/14/2020. According to Harvest's Chief Operating Officer Garrett Paolella, with the Federal Reserve continuing to keep rates low and adding stimulus to the market, investors can expect returns from fixed income in 2021 to once again be challenging at best, making a strategic asset allocation framework focused on total return while finding alternative ways to generate yield key. The 2021 Portfolio's initial target asset allocation as of 1/1/2021 is 100% fixed income. Recovery Fund payments should also provide some boost next year, especially across the euro area periphery and Eastern Europe. Global equities are represented by the MSCI ACWI Index. These timely accommodation and liquidity injection measures, as we discussed in our mid-year outlook, helped calm the markets and catalyzed a sharp rebound in asset prices. Source: MSCI ACWI world index as of 30 November 2020. Going into 2021, investors don’t seem fazed that these signs of excess could be foreshadowing a replay of 2000, and companies seeking to go public don’t appear to be slowing down anytime soon. In this environment, we are expressing a risk-on view in multi-asset portfolios with a preference for equities over other risk assets. We are also modestly overweight select, high-quality emerging market government bonds that may perform well during risk-off events. The first half of 2021 could offer more opportunities to lean into the recovery as it develops. Overall within our multi-asset portfolios, we favor a modest overweight to risk assets – both equities and credit. ... As we turn to our asset allocation views, it is a factor we need to consider, if only at the margin. Valuations appear rich on an absolute basis, but low interest rates, policy support, and profit growth improvement should be supportive over the cyclical horizon. CH-020.4.038.582-2 LEI: 549300GHCCJWKY72R127. Our Global Macro Asset Allocation Services provides timely asset allocation advice to investors across global asset classes Tools at Your Disposal – Investment Recommendations Investment recommendations across global equities, fixed income, currencies, commodities, real estate, sectors, industries, regions, and countries. Asset Allocation Quarterly (First Quarter 2021) by the Asset Allocation Committee | PDF. In a downside scenario, additional fiscal stimulus could be enacted to support growth. In the upcoming webcast, Turn the Page – Asset Allocation in 2021, Dan Phillips, Director Asset Allocation Strategy, Northern Trust Asset Management; and Michael Natale, Head of … Aggressive fiscal and monetary stimulus from major economies since March is likely to engineer a strong rebound in trade, consumption and capital spending next year, which should translate into double-digit growth in corporate profits next year. While we expect global growth to rebound in 2021, we also expect that developed market central banks will be gradual in their response to the improving macro backdrop. However, large fiscal injections, climbing government debt, and accommodative central banks could lead to higher inflation in a post-COVID world (see Figure 6). We also believe gold provides a good store of value over the long term with a low correlation to traditional risk assets. We are overweight equities given expectations that corporate earnings will rebound in 2021 and interest rates will remain low. As the global economy transitions to an early cycle phase, we expect profit growth to accelerate, although a high degree of uncertainty remains on the speed and strength of recovery given the opposite forces of slow economic activity and record monetary and fiscal stimulus. 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Make sure you're not taking on undue risk with these five asset allocation rules. The pandemic was a black swan event that caused the biggest quarterly drop in global GDP and increase in unemployment since the Great Depression, and the drawdown in equity and credit markets was one of the fastest on record. Download our investor handout to learn about how we are positioning portfolios across global asset classes. Our expectation is that inflation globally will remain subdued in the near term as the effects of the pandemic – weaker consumer demand, lower energy prices, and higher unemployment – keep the price of goods in check. Strong economic growth looks Pacific Investment Management Company LLC (“PIMCO”) is an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). Focused fiscal stimulus efforts and healing in the labor market should aid personal savings and consumption, benefiting the housing and consumer durables sectors. Asset allocation themes for 2021. While we are positioning to benefit from a cyclical recovery, it remains critical to build portfolios that can withstand a range of economic scenarios. In short, nothing about 2020 was normal. Note this is very different from the procyclical austerity-oriented policy adopted in the euro area following the 2008–2009 and 2011–2012 recessions. Of course, this allocation will begin to shift in favor of bonds as we get closer to 2055. As communities and investors alike eagerly anticipate the end of a historic year, many are hoping for calmer waters ahead in 2021. These recommendations, based on … (For details, please read our blog post on the Fed’s monetary policy framework.) U.S. inflation expectations based on 5-year breakeven inflation; European inflation based on 5-year/5-year inflation swap; Japan inflation based on 5-year/5-year inflation swap. Whichever party controls the Senate will have a very thin majority, meaning compromise will still be crucial to passing legislation. We continue to favor housing-related credits (mainly in the U.S.) given strong fundamentals: The housing market has been resilient through the COVID shock, as initial conditions were strong with low leverage and healthy consumer balance sheets, and the sector has benefited from low interest rates, loss mitigation policies, and tight inventories. International Bond Fund (U.S. Dollar-Hedged), LDUR - Enhanced Low Duration Active Exchange-Traded Fund, MINT - Enhanced Short Maturity Active Exchange-Traded Fund, MFEM - RAFI Dynamic Multi-Factor Emerging Markets Equity ETF, MFDX - RAFI Dynamic Multi-Factor International Equity ETF, MFUS - RAFI Dynamic Multi-Factor U.S. Equity ETF, Targeted Municipal Ladder Managed Account, Gurtin Municipal Extended Value Managed Account, Gurtin Municipal Intermediate Value Managed Account, Gurtin Municipal Stability Managed Account, EMNT - Enhanced Short Maturity Active ESG Exchange-Traded Fund. The drawdown in equity and credit markets was one of the fastest on record. The Asset Allocation Committee (“the AAC” or “the Committee”) has therefore consolidated its positive views on economically sensitive assets, but the “risk on” tenor remains moderate. Source: MSCI, FactSet estimates, and PIMCO calculations as of 31 October 2020 Cyclicals: autos, banks, capital goods, consumer durables, diversified financials, energy, materials, media, semiconductors, transportation. U.S. mortgage bonds continue to price in some uncertainty about future delinquency and forbearance effects, and non-agency mortgage-backed securities did not receive any explicit Fed support, so we are finding attractively priced opportunities in these areas. All Rights Reserved. At the urging of an investment advisor (I’m not a fan of most), I put it in an aggressive growth fund instead. ©2021 PIMCO. Discretionary measures include direct payments to individuals and businesses, loan forgiveness, increased healthcare spending, and tax cuts. PIMCO and PIMCO Investments is solely responsible for its content. With further advancements in COVID testing, contact tracing, and vaccine deployment diminishing the need for social distancing, economic growth should recover further. The following is a guest post from FS sponsor, FarmTogether, a leading farm investing platform. This document is not intended as an offer, a solicitation of offer or a recommendation, to deal in shares of securities or any financial instruments. Volatility management and estimating returns. The two key swing factors – virus containment and fiscal policy support – will greatly influence the recovery process. The Indian economy is struggling to recoup its growth mojo. One way to measure this is via the relative spread between the earnings yield on equities and the spread on corporate bonds. Moreover, we advocated a modest risk-on posture in multi-asset portfolios with emphasis on higher-quality, resilient … Increased earnings growth is positive for both equities and credit, but it provides a more significant tailwind for equity markets. This dynamic has led to attractive valuations for many inflation-linked assets, and we believe it is a good time to add inflation hedges to multi-asset portfolios. 2020 has been a turbulent year for investors to say the least. 2020 was an extraordinary year for financial markets. We are avoiding more growth-sensitive real assets – such as energy commodities – given our expectations for a gradual economic recovery with meaningful downside risks and low or negative real yields for years to come. That said, they remain bearish on a large portion of developed market government bonds and favour an allocation to equity on a selective basis. Going forward, the Fed will also require inflation to be at or above the 2% inflation target in order to raise rates. U.S. Treasuries have more room to rally than most developed market government bonds and are likely to remain the flight-to-quality asset of choice, so we remain overweight in our multi-asset portfolios. Looking back over the year, we have gone – rather abruptly – from a late cycle environment in December 2019 to an early cycle environment in December 2020. These sectors include technology companies, which are supported by strong fundamentals and stand to benefit further from secular trends accelerated by COVID. Credit spreads have tightened meaningfully since March and April, and while we believe credit is less attractive than equities on a relative basis, we see pockets of opportunity in certain segments. Farmland investing is one way to reduce volatility in your portfolio and generate long-term passive income. Asset Allocation Update: Diversified Strategist Portfolios (DSP) December 2020 1 2021 OUTLOOK A V-SHAPED RECOVERY We are moderately overweight risk — with a preference for high yield bonds and global listed infrastructure — entering 2021, as we expect fundamentals will catch up to the recent market surge. To be sure, the global economy is not out of the woods just yet and the trajectory of the pandemic will undoubtedly influence the speed of the economic recovery. You have not saved any content. Global Asset Allocation Views 1Q 2021. Core global fixed Income allocation broadly representative of Bloomberg Barclays Global Aggregate Index regional weights. You can make around 10 percent allocation to gold to hedge your investments,” says Kalpesh. Defensives: utilities, telecom services, food and staples retailing, food/beverage/tobacco, household products, pharma and biotech, and healthcare equipment and services. However, we continue to focus on portfolio diversification and resiliency given the path of potential outcomes remains unusually wide amid the unresolved health crisis. The S&P 500 Index. Eastspring’s Singapore-based Eastspring Portfolio Advisers team believes global growth will come in above trend from the second half of 2021 but that any acceleration in core prices is unlikely to be sufficient to prompt a rate hike. While almost no one, including us, predicted how the pandemic would unfold in different parts of the world, its aftermath has left the global economy in a completely different place in less than a year. Please send me your recommendations with supported documentation. When I opened a Roth IRA in 1999, I called my bank and asked to put it in the S&P 500. That said, they remain bearish on a large portion of developed market Within corporate credit, sectors are recovering at different paces depending on how the pandemic affected them. Back in late 2019, we were concerned about slowing growth, rich valuations, and high levels of corporate leverage. The recovery in activity and ongoing improvement in corporate profits should be supportive for a rebound in cyclically sensitive assets (see Figure 3), which have meaningfully lagged market leaders like big tech since the market bottom in March. Invesco Investment Solutions shares our tactical asset allocation outlook for 2021. The world’s recovery from the Covid-19 pandemic should provide a strong boost to global stocks in 2021. Source: PIMCO, governments and central banks as of 30 November 2020. The basic premise is that we become risk averse as we age given we have less of an ability to generate income. 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