Planning matters

Investment Outlook: A Mid-Year Update

Building investment strategies aligned with your individual goals is an important component of your overall financial picture. As a team, we review accounts throughout the year looking at overall portfolio performance and potential allocation changes in light of current market conditions and economic trends. Below shares our current outlook as we head into the second half of 2021 and what recommendations we’re making to our clients.

At present we continue to favor higher weights in stocks and a lower allocation in bonds due to stronger than average economic and earnings growth, and low interest rates being offered by bonds. Most currently, we are modestly increasing developed international holdings as part of our rebalancing efforts. 

Since the beginning of 2021, global equities are up 11% as measured by the MSCI All Country World Index. Domestic bonds, while recently performing modestly better, continue to be down just under 2% as measured by the Lehman Aggregate Bond Index.

The U.S. economy has been able to grow faster coming out of the pandemic driven recession than most other developed countries. Unemployment, however, remains elevated at 5.9%. The Federal Reserve recently reiterated their commitment to supporting the economy with low interest rates despite growing inflationary concerns. Their goal is to get unemployment rates closer to pre-pandemic levels and see the potential of a 4.5% unemployment rate by year end.

Developed International economies are catching up to the U.S. in their vaccination efforts which may lead to an acceleration in economic activity. This combined with lower equity valuations and supportive fiscal policy gives developed international market equities the potential to outperform as the global economy gradually accelerates over the coming quarters.

We invite you to review an educational piece we call the Asset Class Opinions. Our financial planners, along with our investment strategist, Lynn Snyder, CFA, update this piece periodically based on our research and what we’re seeing in the economic environment. The information guides our firm’s decisions as we review client’s portfolios throughout the year, rebalancing accounts as necessary. If you have questions on how this relates to your individual situation, please contact your Planner.


Written By Lynn Snyder, CFA