Slow and steady wins the race

Question: How should investors position themselves for a volatile environment?

Steve Chiavarone: From a multi-asset perspective, we think the words of the day are 'caution' and 'patience.' We want to stay close to neutral in our portfolios. This is not, in a baseball analogy, a 3-1 count where you want to swing for the fences. It's more like a 1-2 or a 2-2 count, you want to foul off those tough pitches. So that means, a relatively neutral to slightly overweight allocation in stocks versus bonds. On the fixed income side, cash is an asset class where yields are quite robust right now and offer attractive yields at this point. In addition, as you start to go further out the curve, we're more neutral in duration, having closed a large, short-duration call. But we do find ourselves cautious on the credit front. We are underweight in investment grade corporates, we're underweight in high-yield. We do, however, see some opportunities in EM debt where some of the spreads have been attractive. Moving over to equities, a similar theme. We've gone overweight non-U.S. equities, both developed and emerging for the first time, really, in a couple of years. On the idea that we're starting to see the dollar weaken a little bit, we're starting to see China reopen, and we're starting to see green shoots in some of those economies coming from that. In the U.S., it's the defense on the field. So we prefer defensive dividend paying equities that have some protection, and have lower beta, and a little bit less risk to ride out the storm. So when we think about a portfolio, it's one where you're not taking huge bets on either side. You're prepared to be defensive with little pockets of offense where they present themselves at attractive valuations.