ASSET ALLOCATION SUMMARY
Macro/Fed Policy
- The U.S. labor market remains strong and the pace of economic growth continues to exceed low expectations
- The Fed has made progress on the inflation front -- our proprietary measure of core inflation recently came in at 2.8% YoY
- It appears rate cuts are coming, but a notable deterioration in economic data and continued disinflation may be required to validate expectations for significant policy easing in 2024
Equities
- We are positive on domestic equities given our outlook for corporate earnings and advances in technology to support productivity
- Within U.S. equities we are tilted towards mid and small caps, dividend payers, and companies with lower valuation multiples
- While the S&P 500 Index trades at a steep premium to international equities, relative valuations outside of the top-heavy market gauges are near long-term averages
- Outside the U.S. we are underweight Europe and China but see more attractive prospects for growth and stability elsewhere
Source: WisdomTree, as of December 2023. Evaluations are subject to change as market conditions change. This is for illustration purposes only and does not represent investment advice. All evaluations are on a relative and not absolute basis. Red = a negative relative evaluation; gray = a neutral relative evaluation; green = a positive relative evaluation. You cannot invest in an index, and past performance does not guarantee future results.
Fixed Income
- We continue to add duration in a deliberate manner, moving closer to a “neutral” stance relative to benchmarks
- However, given the inverted nature of the yield curve and our expectation for ongoing interest rate volatility, we remain allocated to short-duration bonds, including Treasury floating rate notes
- We remain constructive on quality screened credit and have selectively rotated into mortgage-backed securities
Source: WisdomTree, as of December 2023. Evaluations are subject to change as market conditions change. This is for illustration purposes only and does not represent investment advice. All evaluations are on a relative and not absolute basis. Red = a negative relative evaluation; gray = a neutral relative evaluation; green = a positive relative evaluation. You cannot invest in an index, and past performance does not guarantee future results.
Alternatives
- With the expectation that stock-bond correlations could remain in positive territory, we believe trend-following and other liquid alternative strategies can play an important role in multi-asset class portfolios
Source: WisdomTree, as of December 2023. Evaluations are subject to change as market conditions change. This is for illustration purposes only and does not represent investment advice. All evaluations are on a relative and not absolute basis. Red = a negative relative evaluation; gray = a neutral relative evaluation; green = a positive relative evaluation. You cannot invest in an index, and past performance does not guarantee future results.
Related Resources
IMPORTANT INFORMATION
Investors should carefully consider the investment objectives, risks, charges and expenses of the Funds before investing. To obtain a prospectus containing this and other important information, please call 866.909.9473, or visit WisdomTree.com/investments to view or download a prospectus. Investors should read the prospectus carefully before investing.
There are risks associated with investing, including the possible loss of principal. Foreign investing involves special risks, such as risk of loss from currency fluctuation or political or economic uncertainty. Investments in emerging or offshore markets are generally less liquid and less efficient than investments in developed markets and are subject to additional risks, such as risks of adverse governmental regulation and intervention or political developments. Funds focusing their investments on certain sectors and/or regions and/or smaller companies increase their vulnerability to any single economic or regulatory development. This may result in greater share price volatility.
Dividends are not guaranteed, and a company currently paying dividends may cease paying dividends at any time.
Fixed income investments are subject to interest rate risk; their value will normally decline as interest rates rise. High-yield or “junk” bonds have lower credit ratings and involve a greater risk to principal. Fixed income investments are also subject to credit risk, the risk that the issuer of a bond will fail to pay interest and principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline. Diversification does not guarantee a profit or eliminate the risk of a loss.
You cannot invest directly in an index. Index performance does not represent actual fund or portfolio performance. A fund or portfolio may differ significantly from the securities included in the index. Index performance assumes reinvestment of dividends but does not reflect any management fees, transaction costs or other expenses that would be incurred by a portfolio or fund, or brokerage commissions on transactions in fund shares. Such fees, expenses and commissions could reduce returns.
This material contains the opinions of the authors, which are subject to change, and should not be considered or interpreted as a recommendation to participate in any particular trading strategy, or deemed to be an offer or sale of any investment product, and it should not be relied on as such. There is no guarantee that any strategies discussed will work under all market conditions. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This material should not be relied upon as research or investment advice regarding any security in particular. The user of this information assumes the entire risk of any use made of the information provided herein.
Kevin Flanagan, Chris Gannatti, Rick Harper, Jeremy Schwartz, and Jeff Weniger are registered representatives of Foreside Fund Services, LLC.
WisdomTree Funds are distributed by Foreside Fund Services, LLC, in the U.S.