Article
Applied philosophy – Are global equities in a typical mid-cycle phase?
November 26, 2024
Welcome to Applied Philosophy, a regular piece on global equity markets from András Vig and the Global Market Strategy Office. In the piece, they take an in-depth look at a topic of economic or market significance, before assessing how its evolution could inform or impact their model asset allocation.
After a period of uncertainty in Q3 2024, global equity markets settled down in the autumn. The US Presidential election had an impact, although we expect that to fade. In our view, how the equity market cycle progresses is more likely to be driven by economic fundamentals and valuations. We think that global equities are in a mid-cycle phase and use previous episodes to determine how it may develop.
FAQs
Asset allocation is the process of dividing an investment portfolio among different asset classes, such as stocks, bonds and cash and so on. Bonds generally tend to be ‘safer’ investments than stocks and are, for example, seen as more defensive. Assets are allocated based on economic and monetary expectations.
Model portfolios are a diversified group of assets. They are designed to achieve an expected return with the corresponding risk. Model portfolios are usually extensively researched and, in most cases, have a combination of managed investments.
Spreading the risk and number of potential opportunities across various asset classes, such as equities, fixed income, and commodities. The aim of diversification is to reduce the overall risk of the portfolio.
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