Strategic Asset Allocation

Equity returns have been exceptional over the past decade, but can they be repeated? Our analysis points to significantly lower returns ahead, particularly for US equities, where valuations have reached historically elevated levels. We examine the implications for strategic asset allocation and where opportunities may lie beyond the US…

While corporate profits are breaking records and more than 85% of U.S. shares are held by the top 10% of households, wage income as a percentage of GDP is declining, many young people are losing the prospect of homeownership, and AI is eroding job security. Over the next decade, this could lead to a political backlash, with higher taxes on capital, greater political pressure on monetary policy, and higher inheritance taxes.

Strategic Asset Allocation (SAA) plays a crucial role in an investors’ decision-making process. This report features the quarterly update of three SAA models, their portfolio characteristics and the (proprietary) data we have used to construct the SAA models. In addition, we update the Expected Returns based on the return assumptions of approx. 70 asset managers and present tables with volatility and correlation data for every asset class.