1.
Deploy cash into bonds: corporate and municipal credit quality is good, and cash rates are biased lower.
2.
Treasure curve volatility leads to a neutral-to-short duration preference, using short duration credit (IG, HY, munis) and balanced with structured products and taxable munis.
3.
Strong fundamentals create an attractive opportunity in structured credit and convertible bonds.
Policity rates have fallen: reinvestment risk still dominates portfolios.
Uncertainty about growth and inflation suggests higher and more volatile market interest rates, making duration an unreliable source of returns.
U.S. public credit quality is expected to remain very strong, supported by still-resilient economic activity.
1.
Deploy cash into bonds: corporate and municipal credit quality is good, and cash rates are biased lower.
2.
While the Q1 pace of European performance is likely not sustainable, we see tactical upside in ex-U.S. equities.
3.
Small caps are unlikely to outperform durably unless interest rates move lower while growth is resilient – unlikely this year.
We are at maximum policy uncertainty, but if earnings quality holds, equity market volatility can provide relief from high valuations and create buying opportunities.
Enthusiasm for U.S. assets is fading, while Europe’s increased defense and infrastructure spending faster interest rates cut offer potential upside.
The AI trend is here to stay, seen in investment in digital and energy infrastructure.
Consider deploying gains into high-yield corporate credit.
Non-U.S. equities remain more vulnerable to elevated energy costs and restrictive monetary policy, with geopolitical risk still a live headwind rather than a fading one.
Concentration risk is rising again, reinforcing the case for selective diversification through U.S. large cap value and high-quality small caps. Investors can consider satellite exposures to diversifying, high-quality sectors such as financials.
AI remains a key market driver; leadership has stayed concentrated in semiconductors, keeping the case for quality and diversification intact.
U.S. equities remain supported by resilient earnings, AI-driven investment, and strong fundamentals, even as a cautious Fed keeps policy restrictive.
For new equity exposure, favor AI infrastructure, materials, digital infrastructure, and high-quality small caps.
Neutral U.S. small cap and ex-U.S. developed equities, with a quality bias and exposure to AI and policy tailwinds.
Market weight U.S. large cap equities, prioritizing companies with strong earnings quality.
Private Markets
Fixed Income
Equity
Alternatives
Our View
Portfolio Positioning
Maintain market weight exposure to floating-rate bank loans, biasing toward the highest-quality selection.
We continue to favor high-quality credit and short-duration corporates, while using longer-duration exposure selectively where yields are more attractive, though Treasury's direct intervention in the long end adds a new variable to that timing.
Higher all-in yields have improved the income opportunity, though recent rate volatility reinforces the need for more active duration management.
The U.S. public and private credit cycle is maturing. Credit fundamentals remain strong, and we expect overall quality to stay resilient, but lower-quality segments, such as CCC-rated high yield and more concentrated areas of private credit, appear increasingly vulnerable.
Balancing short duration credit exposure with longer duration in infrastructure debt, leaning into the steeper municipal curves.
Keeping credit exposure (IG / HY) shorter duration to manage rate volatility and credit risk. Volatility in long rates creates buying opportunities for duration above a ~4.7% 10Y Treasury yield.
Alternatives
Private Markets
Fixed Income
Equity
Our View
Portfolio Positioning
Deal activity has improved, but macro uncertainty and private credit stress may temper opportunities.
Private market allocations continue to grow, but increased competition and signs of credit stress make selectivity more important.
Using resilient mid-market private credit and equity for qualified investor portfolios.
Alternatives
Private Markets
Fixed Income
Equity
Our View
Portfolio Positioning
Historically, commodities and gold have served as effective diversifiers in eras of upside inflation surprise; recent geopolitical events reinforce this role.
Considering gold and commodities as potential diversifiers during periods of inflation and geopolitical uncertainty.
Considering gold/precious metals/industrial metals as a 5-20% satellite sourced from equity.
Alternatives
Private Markets
Fixed Income
Equity
Geopolitical shocks have become more frequent, influencing even traditionally “safe haven” U.S. assets.
Our View
Portfolio Positioning