Rebalancing act: adapting portfolios to changing markets
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Explore the latest market insights driving Target Allocation Model Portfolios as they adapt to current market environments.
Hi, I'm Tushar Yadava, and I'm here to give you a quick update on the latest changes to our asset allocation views in the BlackRock Model Portfolios, and why we believe they make sense in the current market environment.
First and foremost, we are keeping our foot on the gas when it comes to risk appetite. In stock and bond portfolios, we prefer to adjust to higher weights in equities. This is because the market moves so far this year have drifted multi asset portfolios that hold stocks to an even larger portion of equities, which is what we think is well positioned for the current slowing-but-by-no-means-slower macro environment here in the US.
Second, we are favoring growth equities, both within the US and the developed markets. Growth stocks are primarily the ones driving earnings growth for both regions as a whole, and while we have long espoused a positive view on growth slices of large cap stocks in the US, we are now also adding the rest of the developed markets to this view, based on improvements in their forward earnings expectations from analysts.
Third, as the central bank picture changes both here in the US and also in the Emerging Markets, we are sensitive to allocation decisions that could be affected by a change in the prevailing winds from these institutions. In the last three months we have seen four times as many rate cuts as hikes from EM central banks, and the majority of EM central banks have chosen to hold rates steady, perhaps as they sit on the precipice of cuts. In EM equities this results in a preference for exposure to the asset class as this shift towards accommodative policy has the potential to be beneficial for asset class returns, and in fixed income sleeves favoring being selective in credit, particularly investment grade with spreads over treasuries at ultra-tight levels.
For more information, please check out our latest moves on the advisor center or reach out to your BlackRock market teams. Thanks, and have a great summer.
The views expressed herein relate to the BlackRock Model Portfolios as of June 6, 2024. Information shown represents the current investment strategy and philosophy of BlackRock, the model portfolio provider, and is subject to change. There is no guarantee that any forecasts made will come to pass.
Three insights on our market views
Hear from Tushar Yadava, Market Strategist for the Target Allocation model portfolios as he reviews the market changes shaping the latest portfolio allocation updates.
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