Global Asset Allocation Strategy: May 2015 Update

Global Asset Allocation Strategy: May 2015 Update

 

S

o far, 2015 has been a volatile and choppy market here in the US. Global investors have begun to look outside the US for value opportunities.

Below is an update of my strategic global asset allocation model, including changes and a few key highlights.

 

How the global strategy performed in April:

Overseas markets continue to outperform US equity markets. And we are seeing increasing weakness in US Treasury Bonds.

This may be the start of a longer term “exit” from US markets — as assets continue to shift into international markets.

 

global perf april 2015

source: ETFreplay

 

Changes to the global model for May:

global strategy may 2015

 

This month we are seeing a big shift out of US Treasury bonds and an exit from US equities.

It’s no secret that the US Federal Reserve (aka The Fed) is planning to slow down its stimulus plans for the US economy.

(Whether they should or not, is a discussion for another day.)

This is causing many investors to look outside of the US for value.

Since 2008, the US stock market has been moving in lockstep with the Federal Reserve’s stimulus packages:

fed qe ending

So what happens when the Fed takes its foot off the gas pedal?

This is what has been on the minds of investors in 2015.

Meanwhile… China and European countries are looking to INCREASE stimulus.

international qe1 china

intnerational qe2

Fed generated stimulus has been so positive for US stocks, that foreign countries may be trying to replicate its success. As a result, we are starting to see outperformance from international markets.

 

Questions? Thoughts?

 

Feel free to leave a comment below or you can reach out to me privately here.

Thanks,

John Rothe

CEO & Chief Investment Officer

Riverbend Investment Management

 

Feature Image: Wikimedia Commons/Maximilian Dörrbecker (Chumwa)

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