In its Mid-Year 2019 Capital Market Outlook report, GLC Asset Management Group is recommending that investors should take action to get back to neutral equity and fixed-income positions.
"We believe the global economy has enough positive momentum to exit the current global slowdown within the next two to four quarters," said Brent Joyce, Chief Investment Strategist, GLC. "What's causing us concern are the sharp advances in equities, commodities and bonds – it is tough to justify a 'bull market' in everything. We see a balanced and diversified asset mix that includes both equities and fixed income as most appropriate to navigate through our forecast horizon."
With respect to fixed income, GLC says bond yields have declined to such an extent that incremental returns moving forward will be modest. “Fixed income remains attractive as a risk-mitigation tool. GLC recommends a neutral weight. GLC's base-case scenario calls for small enough increases in bond yields that they forecast a further total bond market return of 0.5 per cent for the remainder of 2019.”
For equity, GLC recommends “broad and diversified geographic and sector allocations, with a slight equity overweight toward Canada.” They recommend neutral exposure to U.S. and EAFE equities and recommend a low-to-neutral weight in Emerging Markets.
To learn more, consult the full report here.