Strategic Asset Allocation

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.

What if the classic 60/40 diversification no longer works? Government bonds increasingly move in the same direction as equities during risk-off episodes. What are attractive alternatives to government bonds? In the May special, we discussed commodities and private debt; in this report, we examine whether gold or Bitcoin is an attractive alternative.