I'm Linda Bakhshian, Senior Portfolio Manager at Federated Investors.
Why do balanced allocation strategies make sense for this environment? For 2020, our outlook is for positive improvement in equity markets, although the gains are probably not gonna be as high as 2019. So we expect the trade issues to deescalate somewhat. We do expect some kind of resolution with Brexit but investors have to balance that with volatility around political issues in 2020. So having said that, a balanced portfolio between fixed-income and equities with a tilt towards equities is probably warranted in balanced funds. In the equity markets, we like the value cyclical segment of the market. Although, don't abandon growth all together. However, defensives do look a little expensive at this point. And in fixed-income, we like credit at this point. However, the spreads are pretty tight and hence, really expect coupon-clipping for 2020. And if you have a more optimistic view of emerging markets and global growth, as we do, maybe tilting a little bit more towards emerging market debt is not such a bad idea for investors.
Views are as of December 12, 2019 and are subject to change based on market conditions and other factors. These views should not be construed as recommendations for any specific security or sector. International investing involves special risks including currency risk, increased volatility, political risks, and differences in auditing and other financial standards. Prices of emerging markets securities can be significantly more volatile than the prices of securities in developed countries, and currency risk and political risks are accentuated in emerging markets. Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices. Federated Equity Management Company of Pennsylvania 19-10157 (12/19)