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.
To kick things off, we prefer to tactically reduce equity overweights in this environment, and after seeing gains in portfolios from growth heavy stocks like technology, we believe it may be time to trim some of those winners while staying mindful of potential seasonal and election-related volatility, with an eye towards potentially re-risking after the election.
In addition, we think it may be time to bring any regional tilts back closer to neutral. Our view is such a move favors US stocks less than before, relative to their international counterparts. Earnings in the US was as expected – but didn’t provide enough fuel – in terms of surprises, estimate revisions from analysts or guidance to tell us that stocks here can vastly re-rate higher based on fundamental factors alone. In other words, a lot of the strength for the US is already reflected in the price of stocks. Hey, we’re still bullish, bullish on stocks overall, but not as heavily so for the time being.
Finally, we think it is a good time to trim long-duration positions, which have greatly benefited from fading the sticky inflation/higher for longer fanaticism that prevailed in the market in the spring, and are now reflecting a Federal Reserve that is intent on cutting rates and bond yields that have marched lower in lock-step with their dovish turn.
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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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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