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.
With a lot of the event-driven uncertainties that were looming over the market now resolved, we approach the end of the year preferring to tactically add back to our equity overweight, eyeing US momentum stocks, which already boast strong fundamentals characteristics like earnings growth, and benefit from the economic momentum and lower volatility environment.
There’s gold in them there portfolios. Gold has confounded many traditional relationships this year, rallying in the face of what would be traditional headwinds like a higher dollar and real rates. We believe stockpiling of the yellow metal by global central banks, at the same time as many of the same sovereign nations add to their sizable debt burdens – has been a driver for this consistent performance. To us, a small tactical allocation to the asset class makes sense, when funded out of traditional fixed income.
(on screen: Add more credit risk without lengthening portfolio duration)
Finally, and related in some part to our tactical decision to hold less in longer duration instruments within our bond portfolios, another lever to consider pulling is swapping some investment grade debt for shorter duration high yield bonds and convertible debt. This fits within our overall theme of riding a risk-on wave as the economy looks on solid footing.
For more information, please check out our latest moves on the advisor center, or reach out to your BlackRock market teams. Thanks for watching.
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