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Members of D.A. Davidson & Co.

Third Quarter 2021 Asset Allocation Outlook

"Third Quarter 2021 Asset Allocation Outlook


  • There is no recession within our forecast period. Monetary and fiscal stimulus should continue in the U.S. over our three-year forecast period, yet at a decreasing rate as the economy recovers.

  • After a surge in inflation this year and into next year, resulting from the economic recovery following the pandemic, inflation should settle within the Fed’s threshold.

  • The ECB remains aggressively accommodative and is supported by the EU’s fiscal stimulus, which should help to hasten the pace of their economic recovery.

  • Equity allocations among all strategies remain elevated with the retention of a heavy tilt toward value and, where risk appropriate, an overweight to small capitalization stocks.

  • The high allocation to international stocks remains intact given our expectations of overseas growth.

  • In the more risk-tolerant strategies where emerging market exposure is employed, mainland Chinese stocks are either vastly underweighted or excluded.

  • Commodity exposure is retained, with heavier concentration in the more risk-averse strategies, for the advantages they afford during heightened geopolitical risk."


    (Asset Allocation Quarterly Third Quarter 2021 07/21/2021 by The Asset Allocation Committee of Confluence Investment Management LLC)