Institutional Model

Commentary

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.

By: Cait Dourney Dirk Hofschire Jacob Weinstein

Updated: 11/30/2023

Key Takeaways

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.

Get the full white paper

The business cycle approach to asset allocation

Next steps to consider

Asset Allocation Research Team (AART)

Access economic, fundamental, and quantitative analysis from our Asset Allocation Research Team.

Learn more

Asset Class Overview

Explore strategies and custom solutions across asset classes, designed to help you face your most complex challenges head on.

Learn more

Neither asset allocation nor diversification ensures a profit or guarantees against loss.

1136635.1

9D891E1E26C441189A0B705A9EE07D31

Past performance is no guarantee of future results.

This information is intended for the sole use of institutional investors. Retail investors and any other persons who are not institutional investors should not act or rely on this information.

Information provided in, and presentation of, this document are for informational and educational purposes only and are not a recommendation to take any particular action, or any action at all, nor an offer or solicitation to buy or sell any securities or services presented. It is not investment advice. Fidelity does not provide legal or tax advice.

Before making any investment decisions, you should consult with your own professional advisers and take into account all of the particular facts and circumstances of your individual situation. Fidelity and its representatives may have a conflict of interest in the products or services mentioned in these materials because they have a financial interest in them, and receive compensation, directly or indirectly, in connection with the management, distribution, and/or servicing of these products or services, including Fidelity funds, certain third-party funds and products, and certain investment services.

Registered investment products (including mutual funds and ETFs) and collective investment trusts managed by Fidelity Management Trust Company (FMTC) are offered by Fidelity Distributors Company LLC (FDC LLC), a registered broker-dealer. Fidelity Institutional Asset Management (FIAM) investment management services and products are managed by the Fidelity Investments companies of FIAM LLC, a U.S. registered investment adviser, or Fidelity Institutional Asset Management Trust Company, a New Hampshire trust company. FIAM products and services may be presented by FDC LLC, a non-exclusive financial intermediary affiliated with FIAM and compensated for such services.