Summary
We have three strategic asset-allocation models, targeting risk-tolerance levels: Conservative, Growth, and Aggressive. On a regular basis, we make tactical adjustments to the models, based on our outlooks for the various segments of the capital markets. Performance matters, and we monitor it closely. So far in 2026, bonds have taken a modest lead over stocks, while growth stocks have lagged. Looking ahead, from an asset-allocation standpoint, our Stock-Bond Barometer model still sees both asset classes near fair value, so portfolio weights ultimately will depend on strategic factors. We are market-weight on large-cap stocks at this stage of the market cycle. We favor large-caps for growth exposure and financial strength, as well as exposure to the Tech sector. Small- and mid-caps offer better valuation. Our recommended exposure to small- and mid-caps is 15% of equity allocation, in line with the benchmark weighting. One of the market surprises in 2025 was the performance of global stocks, which turned in impressive results. We expect the long-term trend favoring U.S. stocks to re-emerge ultimately, given volatile global economic, political, geopolitical, and currency conditions. That said, international stocks still offer favor
