I’m here with three key takeaways from our March 12th “In the Know” outlook webinar.
First, we’re staying invested through the market volatility. We believe that the combination of tariff policy uncertainty, slowing economic data, and an administration that may be more comfortable with stock market volatility than initially anticipated have all contributed to the volatility, but we are still constructive on equities in the longer run. To navigate today’s markets, we prefer higher quality U.S. large caps that can weather slowing growth and potentially higher interest rates, and are steering clear of small caps.
Second, diversification has been critical. After a long string of disappointing returns, international equities have provided valuable balance to U.S. equity returns. International equities may be benefiting from better-than-expected earnings, as well as prospects for greater infrastructure and defense spending in the wake of the US’s foreign policy approach, particularly in Europe. Our Target Allocation team is still overweight U.S. equities over international, but sees value in taking advantage of select investment opportunities abroad.
Third, our Target Allocation team is increasing its allocation to alternatives, including gold, bitcoin, and liquid alternative strategies. Elevated inflation could keep the Fed on hold, and we believe that elevated geopolitical risk could favor assets like gold and bitcoin. Important to note here that the team sources most of its liquid alternative strategies from fixed income, but sources bitcoin from equities given its higher volatility profile. We also see a lot of value in diversifying alternative strategies with low correlations to stocks.
BlackRock is here to help – if you’d like to continue the conversation with us, please feel free to reach out to your local BlackRock market team or call 877-ASK-1BLK, and I hope to see you at our next In the Know webinar with Rick Rieder and Amanda Lynam on March 27th!
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