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Varied returns highlight the long-run importance of asset allocation

11/05/2018

Varied returns highlight the long-run importance of asset allocation chart final

The relative performance of different asset classes can vary greatly across historic economic cycles. Performance uncertainty and downside protection underpin the need for both diverse and periodically rebalanced portfolios.

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Annual outlook
Global Investment Forum
Over three days a selection of our investment managers, economists and strategists congregated in London for our annual Global Investment Forum (the Forum). As well as sharing their own analysis and insights, the team heard from a range of independent experts with sessions covering geographic regions and topical themes like artificial intelligence, Big Data and tensions around international trade.

Strategic asset allocation: Over- and under-emphasis tables
Our core view is that the global economic recovery has further to run even though monetary policy is slowly normalizing and some economies are close to full capacity.

The Russell 1000® Index (Russell 1000®) consists of approximately 1,000 of the largest companies in the U.S. equity markets.
The Russell 1000® Growth Index measures the performance of those Russell 1000 Companies with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000® Value Index measures the performance of those Russell 1000 Companies with lower price-to-book ratios and lower forecasted growth values.
The Russell Midcap® Index (Russell Midcap®) measures the performance of the smallest 800 U.S. companies in the Russell 1000 Index.
The Russell Midcap® Growth Index measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values.
The Russell Midcap® Value Index measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000® Index (Russell 2000®) is an unmanaged index that measures the performance of the smallest 2000 U.S. companies in the Russell 3000® Index.
The Russell 2000® Growth Index measures the performance of those Russell 2000 Companies with higher price-to-book ratios and higher forecasted growth values.
The Russell 2000® Value Index measures the performance of those Russell 2000 Companies with lower price-to-book ratios and lower forecasted growth values.
The MSCI All Country World Index (ACWI) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets.
The MSCI EAFE Index Europe, Australasia, and Far East Index (EAFE) is a standard unmanaged foreign securities index representing major non-U.S. stock markets, as monitored by Morgan Stanley Capital International.
The MSCI Emerging Markets Index is a market capitalization weighted index comprised of over 800 companies representative of the market structure of the emerging countries in Europe, Latin America, Africa, Middle East and Asia. Prior to January 1, 2002, the returns of the MSCI Emerging Markets Index were presented before application of withholding taxes.
The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index that covers the U.S. investment-grade fixed-rate bond market, including government and credit securities, agency mortgage pass-through securities, asset-backed securities and commercial mortgage-based securities.
The BofA Merrill Lynch 1-3 Year U.S. Corporate & Government Index is an unmanaged index tracking short term U.S. government and corporate securities with maturities between 1 and 2.99years.
The Bloomberg Barclays U.S. Credit Index represents securities that are SEC-registered, taxable and U.S. dollar denominated. The index covers U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity and quality requirements.
The BofA Merrill Lynch High Yield, BB-B Rated Constrained Index is a Benchmark index for high yield corporate bonds which excludes lower rated securities and caps exposure to any one issuer at 2% and is administered by Merrill Lynch.
Investments cannot be made in an index.

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