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.

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Market views driving allocation changes

Timely market analysis helps Target Allocation model portfolios adapt to current markets. These are our views as of May 2025:

We believe in recalibrating risk while maintaining a modest risk-on tilt in equities. Within U.S. equities, we like mega cap and AI companies with resilient balance sheets and long term growth potential. We see potential in actively managed strategies that can tactically rotate to exploit market dispersions.
Number one

We like value-oriented international developed market stocks while taking a moderate view on regional bets to balance the growth/value barbell. We are neutral on Emerging Markets and underweight on China with the short-term aim of mitigating exposure to headline volatility while retaining long-term caution on the region.
Read more: Navigating tariffs Navigating tariffs
Number two

We believe in enhancing fixed income positioning with short-term inflation protection, global diversification, and a marginal overweight to duration, hedging potential near-term tariff-driven inflation surprises while building resilience against possible slower growth and more pronounced disinflation.
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Hi, I'm Tushar Yadava, and I'm here to give you a quick update on the latest changes to our asset allocation views from the BlackRock Model Portfolios, and why we believe they make sense in the current market environment.

(on screen: Cautious optimism keeps us risk on, marginally)

  • We believe in staying very slightly tilted toward a risk on position, but the conviction in remaining strongly overweight stocks relative to bonds has waned given the recent equity market rally. Overall, our outlook is one of cautious optimism, hedging potential near-term tariff-driven inflation surprises while building in resilience against possible slower growth and more pronounced disinflation later in the year.

(on screen: Preference for active strategies & rebalance regional bets)

  • In this environment, we prefer to rotate our broad U.S. equity exposure toward our highest-conviction ideas, emphasizing exposures that lean into mega cap as well as AI companies with resilient balance sheets and potential long-term structural growth drivers, while also increasing exposure to actively managed strategies that can more tactically exploit dispersion and volatility through dynamic theme rotation. Regionally, our equity positioning reflects a more balanced approach, a pragmatic response to the unpredictable nature of ongoing trade negotiations and policy headlines.

(on screen: Keep a tactical stance in fixed income in the advent of tariffs)

  • We prefer to keep a tactical stance with regards to changes in the fixed income environment in the advent of tariffs. While they may introduce short-term inflationary pressures, we view these effects to be one-time and unlikely to reverse the broader trend of structural disinflation. In our view, the greater risk from tariffs is their potential drag on global growth. In portfolios, this can be reflected with short-term TIPs exposures and this is also why we see diversification merit in global bonds with exposures to markets that could be underpricing disinflation, growth risks, and recession fears.

For more information, please check out our latest moves on the advisor center, or reach out to your BlackRock market teams. Thanks for watching.

The views expressed herein relate to the BlackRock Model Portfolios as of  5/19/2025. 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.

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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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