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OPTIMIZE YOUR PORTFOLIOS

Portfolio Playbook: Global recovery continues

With improving global growth, we’re maintaining our risk asset exposure in June, favoring US value, US small-cap, and emerging market stocks. Optimize your portfolios with our outlook and allocation guidance.

Latest market outlook

Risk assets continue to reflect optimism and confidence towards a favorable macro environment with muted volatility in the near term. Based on our framework, we expect global growth to remain below its long-term trend,  but there’s potential for a more balanced contribution from other parts of the world. While the US has led the global recovery since late 2022, recent economic data point to a broadening of growth momentum to other developed markets and emerging markets, except for China.

Where do we go from here?

Leading economic indicators continue to improve at a rapid clip in the eurozone, UK, and Japan, led by rising consumer confidence and manufacturing business surveys. Improving orders and demand expectations, particularly in export-oriented industries, are lifting the prospect for a cyclical rebound in Europe after a prolonged period of anemic growth. Similarly, global earnings revisions have started to reflect improving economic prospects outside the US, with a modest but encouraging upturn across developed markets and emerging markets, apart from China. US earnings prospects continue to lead. The relative performance between major equity markets has started discounting the potential for this rotation. After the pronounced leadership of US equities in January, developed ex-US and emerging market equities have performed remarkably in line with US equities, despite the extraordinary outperformance of mega-cap US technology names.

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    Economic cycle

    • Global growth remains below trend but becoming more balanced.
    • Improving prospects for cyclical rebound outside US.
    Market sentiment

    Market sentiment

    • Risk assets reflect optimism and confidence for a favorable macro environment.
    • Markets start to discount potential for improving growth outside US.
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    Policy implications

    • Inflation momentum appears to be easing again.
    • Rate cuts still postponed until later this year or early 2025.
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    Economic cycle

    • Global economy climbs to above-trend rate and continues to improve.
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    Market sentiment

    • Risk-on sentiment widens as investors look ahead to reinvigorated economy.
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    Policy implications

    • Inflation returns to the Fed’s “comfort zone.”
    • Fed eases policy amid strong growth environment.
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    Economic cycle

    • Lagged effects of policy tightening more severe than expected.
    • Prolonged recession emerges.
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    Market sentiment

    • Flight to quality as the economy deteriorates.
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    Policy implications

    • Fed lowers rates rapidly and normalizes US Treasury yield curve.

Asset allocations to consider

A challenge for tactical investors is preparing for the expected and anticipating the unexpected. The tactical asset allocation (TAA) framework from the Invesco Solutions team is designed to enhance a long-term strategic asset allocation (SAA) by making portfolio tilts based on near-term market views. 

In June, we’re maintaining our exposure to risk assets, including US value and small-cap and emerging market stocks. The tactical, dynamic factor rotation shown below is also utilized in the Invesco Russell 1000® Dynamic Multifactor ETF (OMFL).



  • About our allocations

    • The Invesco Solutions team develops portfolios for client-oriented outcomes over multiple time horizons. Our tactical asset allocation (TAA), regime-based framework dynamically adjusts exposures to asset classes, regions, sectors, and factors, to create multi-asset portfolios designed for the prevailing macroeconomic environment. Strategic asset allocation (SAA) positioning is derived from our rigorous investment process, which consists of long-term capital market assumptions (CMAs), portfolio optimization, and risk management.



  • About our allocations

    • The Invesco Solutions team develops portfolios for client-oriented outcomes over multiple time horizons. Our tactical asset allocation (TAA), regime-based framework dynamically adjusts exposures to asset classes, regions, sectors, and factors, to create multi-asset portfolios designed for the prevailing macroeconomic environment. Strategic asset allocation (SAA) positioning is derived from our rigorous investment process, which consists of long-term capital market assumptions (CMAs), portfolio optimization, and risk management.



  • About our allocations

    • The Invesco Solutions team develops portfolios for client-oriented outcomes over multiple time horizons. Our tactical asset allocation (TAA), regime-based framework dynamically adjusts exposures to asset classes, regions, sectors, and factors, to create multi-asset portfolios designed for the prevailing macroeconomic environment. Strategic asset allocation (SAA) positioning is derived from our rigorous investment process, which consists of long-term capital market assumptions (CMAs), portfolio optimization, and risk management.

How to approach alternatives

Allocations to alternatives like private credit, equity, real assets, listed real assets, commodities, digital assets, and hedge funds can help improve growth, potential income, and diversification. They can also help financial professionals differentiate their practices, attract high-net-worth clients, move up-market, and consolidate and retain AUM.

If you're looking to incorporate alternatives into your portfolios, we suggest considering a 7% allocation, regardless of market or economic regime. Consider using 4% from your equity allocation and 3% from your fixed income allocation to allocate to alternatives. Learn about a unique opportunity in private markets from Invesco Real Estate. Additionally, learn more about our new spot bitcoin ETF, BTCO.

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Asset Manager of the Year for Portfolio Playbook

The 2023 MMI/Barron’s Industry Awards chose Invesco as Asset Manager of the Year - AUM of more than $100 billion. This category 
honors a larger asset manager that exemplifies innovation in delivering better outcomes for investors and financial professionals.