The business cycle approach to asset allocation
The Asset Allocation Research Team examines how a business cycle approach to asset allocation may add value as part of an intermediate-term investment strategy.
- The business cycle reflects the aggregate fluctuations of economic activity, which can be a critical determinant of asset performance over the intermediate term.
- Changes in key economic indicators have historically provided a fairly reliable guide to recognizing the business cycle’s four distinct phases—early, mid, late, and recession.
- Our approach seeks to identify the shifting economic phases, providing a framework for making asset allocation decisions according to the probability that assets mayoutperform or underperform.
- For example, the early cycle phase is typically characterized by a sharp economic recovery and the outperformance of equities and other economically sensitive assets.
- This approach may be incorporated into an asset allocation framework to take advantage of cyclical performance that may deviate from longer-term asset returns.
Next steps to consider
Quantitative Investing
Find out how a blend of human insight, data, and technology can help uncover opportunity for your clients.
Learn more
Sector/Industry
Target specific segments of the economy with our full spectrum of sector funds, ETFs, and other solutions.
Learn more
Model Portfolios
See how model portfolios can help you support your client’s many investment objectives, while also freeing up time for more meaningful conversations.
Learn more
Neither asset allocation nor diversification ensures a profit or guarantees against loss.