Timely commentary, strategic perspectives and in-depth analysis from our investment teams to help guide your portfolio decisions.
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Subtrend growth and elevated recession risks call for cautious allocation. Our highest conviction call is to be overweight duration. We modestly underweight equity and take a neutral stance on credit, preferring investment grade to high yield
Recession remains our base case, at 60% probability, as central bankers say they will fight inflation aggressively. We lowered Crisis to 5% and raised Sub Trend Growth to 35%, acknowledging the global economy’s resilience.
Our portfolio managers remain slightly cautious and emphasize quality in portfolios. Valuations look very reasonable in most regions and industries, but the impact of higher interest rates will be a challenge in 2023.
Market reversals challenged many factors in 1Q 2023, though performance remains broadly positive over 12 months. We continue to view factors’ prospects as attractive, particularly equity value. This quarter, we introduce new credit factors.