Global Equity Market Model Sector Allocation | August 2023

Global equity market model sector allocation | August 2023

Welcome to Applied philosophy, our view on global equity market model sector allocation. Here, Invesco experts take an in-depth look at a topic of economic or market significance and how it’s evolution could inform or impact our model portfolio asset allocation.

Key takeaways

  • Chinese sovereign bonds have outperformed US Treasuries since the middle of 2020.
  • An earlier reopening and more generous fiscal and monetary easing boosted consumer spending in the US and added to inflationary pressures triggering a sharp rise in yields.
  • Meanwhile, longer lockdowns in China and less generous support kept yields there in check.
  • We think that our base case of an end to rate rises in the US and a re-synchronisation of economic growth imply an outperformance of Treasuries over the next 12 months.
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Asset allocation is the process of dividing an investment portfolio among different asset classes, such as stocks, bonds and cash and so on. Bonds generally tend to be ‘safer’ investments than stocks and are, for example, seen as more defensive. Assets are allocated based on economic and monetary expectations.  

Model portfolios are a diversified group of assets. They are designed to achieve an expected return with the corresponding risk. Model portfolios are usually extensively researched and, in most cases, have a combination of managed investments.

Spreading the risk and number of potential opportunities across various asset classes, such as equities, fixed income, and commodities. The aim of diversification is to reduce the overall risk of the portfolio.

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