We begin 2019 with a benchmark allocation to risk assets. Despite expecting slower economic growth in 2019, the fourth quarter 2018 financial market pessimism seems excessive – we do not see a recession in the foreseeable future.

While we are monitoring economic developments closely, we expect further economic growth to support risk assets in 2019.

While 2017 saw historically low volatility and healthy returns across most asset classes, 2018 saw volatility return and no major asset class gain more than 5% for the first time since at least 1972. Driving these poor returns were slowing global growth, trade tensions, European geopolitical concerns, and Federal Reserve interest rate hikes.

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