Summary
We have three strategic asset-allocation models, based on risk-tolerance: Conservative, Growth, and Aggressive. We make tactical adjustments to the models, based on our outlooks for the various segments of the capital markets. In terms of performance through the first half of 2025, stocks and bonds are close, with stocks pulling a few hundred basis points ahead through July. Looking ahead, from an asset-allocation standpoint, our Stock-Bond Barometer model still slightly favors bonds over stocks for long-term portfolio positioning. We are over-weight on large-cap stocks at this stage of the market cycle. We favor large-caps for growth exposure and financial strength, amidst the volatility. Our recommended exposure to small- and mid-caps is 5%-10% of equity allocation, below the benchmark weighting. Global stocks have taken an early performance lead in 2025, although U.S. stocks have outperformed their global peers over the trailing one- and five-year periods. We expect this long-term trend favoring U.S. stocks to continue, given volatile global economic, political, geopolitical, and currency conditions. That said, international stocks offer favorable near-term valuations, and we target an increased 10%-20% of equi
