AA Views

Monthly portfolio weightings and analysis from the ING Portfolio Management teams

• Asset Allocation Views - European Fears Resurface... Again
  Equity markets globally have experienced a swift retracement from the highs reached in March, as European concerns — focused on Spain, this time — have resurfaced to grab investor attention yet again. We recently eliminated our overweight to high yield bonds and our underweight to core fixed income; our model portfolio now stands at a neutral position.
• U.S. Equity Market Outlook
  Our current tactical stance on U.S. equities is neutral. While we are more optimistic than the consensus about U.S. economic prospects for this year and 2013 and have recently raised our forecast for U.S. GDP growth, we believe that much of this improved economic outlook has already been discounted by stock prices.
• Asset Allocation Views - Expectations Playing Catch-Up
  While equity markets have raced to a quick start in 2012, recent data suggest that economic expectations may be catching up with the market’s optimism. Given the strong rally in cyclical assets, we have cut our tactical overweight position in high yield bonds in half and thus reduced our underweight in core bonds.
• Long-Term Capital Market Forecasts: Executive Summary
  Our long-term capital market forecasts provide estimates for expected returns, volatilities and correlations for major U.S. and global asset classes over a ten-year horizon. The forecasts play a critical role in strategic asset allocation for a wide variety of multi-asset products, including our target-date portfolios.
• Asset Allocation Views - Economic Momentum Continues
  Our tactical asset allocation is unchanged from January. U.S. economic data released this month have been mostly in line with or above expectations, and we remain convinced that the recent strength exhibited by the economy should prove sustainable. Meanwhile, financial stress in Europe continues to ease.
• A Look at 2012
  Our central case for 2012 is for modest economic growth in the face of a risky global environment. The U.S. should avoid recession and post moderate growth; consumer exuberance likely will be tempered by continued household balance sheet repair as well as sluggish housing and jobs markets, though recent signs of life in these measures suggest we may be underestimating the U.S. economy. Europe, of course, remains a wildcard.
• Asset Allocation Views - U.S. Growth Picks Up
  Recent data showed continued resilience in the U.S. economy coupled with a slight easing of financial tensions in Europe. The consensus view is that this strength is temporary. We are inclined to dispute this opinion, however; in fact, our current 2012 forecast of 2.5% GDP growth (already modestly above the 2.2% consensus forecast) is likely to be revised upward.
• Asset Allocation Views - U.S. Growth Picks Up
  November saw increasing signs of divergence in cyclical performance between the U.S. and European economies, as the U.S. has shown surprising resilience while Europe remains problematic. We did not make any changes to our positioning this month, remaining neutral between stocks and fixed income.
• Multimedia: Asset Allocation Views: 2012 Outlook
  Our central case is for modest economic growth in the face of a risky global environment. The U.S. should avoid recession in 2012 and post moderate growth, as consumer exuberance will be tempered by continued household balance sheet repair as well as sluggish housing and jobs markets. Inflation should remain contained despite a highly accommodative Federal Reserve.
• Asset Allocation Views - U.S. Improves, but Europe Remains a Wildcard
  Strong data in recent weeks supports our view that the U.S. economy should continue to expand at a moderate pace. This, however, remains conditional on avoiding a financial accident resulting from the debt crisis in Europe, where the news continues to be mixed and volatile.
• Asset Allocation Views - Recent Events Offer Cause for Optimism
  As a result of recent positive developments, the likelihood of two of the most serious risks facing the world economy — a renewed downturn in the U.S. and a financial accident spawned by the euro zone debt crisis — has declined materially. As such, we have moved to a less cautious asset allocation stance.
• Asset Allocation Views - Risks Remain Elevated, We Remain Cautious
  As medium-term macroeconomic and financial risks continue to be high - highlighted by sluggish developed-market economies and persistent uncertainties in peripheral Europe - we have maintained our guarded tactical allocation.
• Asset Allocation Views - Moving to Underweight Equities as Risks Spike
  While the downgrade of U.S. Treasury debt is in itself not a major economic event with respect to global equity markets or asset allocation decision making, it has refocused attention on the lack of confidence in the developed world and in the U.S. in particular.
• Multimedia: Multi-Asset Strategies and Solutions: 2Q11 Update
  The stock market faces increased downside risk, with a growing number of potential triggers for a move downward. However, given the potential positive catalysts — including the continued strong performance of corporate America — a rally remains possible.
• Asset Allocation Views - Special Edition: Equity Markets Continue Their Slide
  Global equity markets continued their slide today, with the S&P 500 Index down 4.5% on the day and 11.7% month to date.
• Asset Allocation Views - Italy Inspires Caution
  Since our last note in mid-June, we implemented a tactical overweight of equities versus bonds; however, recent developments have prompted us to shift back to a neutral position between stocks and bonds. While we believe that the current economic soft patch is likely bottoming and that several headwinds have diminished, certain risks have spiked recently, particularly in the euro zone. Although Greece’s sovereign debt issues are grinding along toward a mid-term solution, Italy has become a bigger cause for concern and the risk of sovereign debt contagion is rising.
• Asset Allocation Views - Slowdown Seen, but Growth Should Reemerge
  Though fading economic momentum is clear, we believe the slowdown will be only temporary, lasting from three to six months. We expect growth to reaccelerate later in 2011, thanks to pent-up demand in the economy and continued strong corporate fundamentals. That said, we have removed our tactical overweight in equities.
• Asset Allocation Views - Market Turbulence Measure Remains Low
  Our proprietary Turbulence Index indicates that equity markets are operating within expected ranges despite the headline noise, allowing us to focus on still-positive fundamentals. In this environment, we think equity markets remain undervalued and have modestly increased our exposure to mid caps.
• Multimedia: Multi-Asset Strategies and Solutions: 1Q11 Update
  Although downside risk has grown more acute in recent months, we remain upbeat about the prospects for risky assets in 2011, particularly in emerging market equities and high yield bonds.
• Asset Allocation Views - Emerging Markets Poised to Succeed
  With greater clarity on the issues that had driven a recent increase in downside risk - conflicts in the Middle East, the Japan earthquake, the rising potential for oil shocks - some uncertainty has diminished. Thus, we have moved to an overweight position in emerging market equities, as we believe the fundamentals that propelled the asset class to outperformance in 2009 and 2010 remain intact.
• Asset Allocation Views - Oil Turmoil
  While we remain cautiously optimistic on risky assets, we have scaled down our tactical exposure to them following the recent escalation in geopolitical risks. We continue to believe that U.S. high yield bonds remain an attractive risky asset class in the context of the strong growth momentum of the U.S. economy despite the heightened risk to the downside.
• Asset Allocation Views - Mid-Cycle Growth Acceleration
  We maintain a positive stance on risky assets. This is in line with our 2011 base-case scenario that the global economy will continue on an expansionary path despite the uncertainties created by rising inflationary pressures in the emerging markets and the uncertain resolution of Europe’s sovereign debt crisis.
• Multimedia: ING Asset Allocation Outlook 2011
  Our base-case scenario is that the global economy continues to muddle through an unclear and ever-shifting environment. Within this context, our investment focus for 2011 will center on two themes: 1) Growth, and 2) Dividends, Income and Yield (“DIY”).
• Asset Allocation Views - Outlook 2011: The Shape of the Year to Come
  Our base-case scenario is that the global economy continues to muddle through an unclear and ever-shifting environment. Within this context, our investment focus for 2011 will center on two themes: 1) Growth, and 2) Dividends, Income and Yield (“DIY”).
• Asset Allocation Views - September 2010
  We expect growth in Europe to slow in 2011 and have shifted to a modest overweight of EAFE growth stocks, within the context of an overall underweight of EAFE equities.
• Asset Allocation Views - August 2010
  The tightening of financial conditions has begun to reverse, and we are increasing an already overweight position in high yield bonds.
• Asset Allocation Views - July 2010
  We have modestly increased exposure to high yield bonds in our model portfolio.
• Asset Allocation Views - June 2010
  U.S. employment data for May suggest that economic recovery may be temporarily stalling. We have therefore moved closer to a neutral asset allocation stance.
• Asset Allocation Views: May 2010
  Gene Lancaric provides an asset allocation update following Europe’s response to the sovereign debt crisis.
• Asset Allocation Views - May 2010
  Europe’s aggressive policy response to its sovereign debt crisis greatly reduces the threat of financial dislocation. We have therefore reinstated an overweight position in large-capitalization U.S. equities.
• Asset Allocation Views: May 2010
  Gene Lancaric comments on Tactical Asset Allocation in light of the European Debt Crisis.
• Asset Allocation Views - May 2010
  Turbulence on global financial markets has worsened in the past few days as investors have grown increasingly fearful that the Southern European government debt crisis may have wider financial and economic consequences.
• Asset Allocation Views - May 2010
  The sovereign debt crisis in Europe has led to a move away from risky assets, reinforcing our shift to neutral equity exposure in late April.
• Asset Allocation Views - April 2010 - UPDATED
  We have moved to a neutral equity position due to events in European sovereign bond markets.
• Asset Allocation Views - April 2010
  Our tactical view continues to emphasize a moderate overweight to risky assets (U.S. large capitalization stocks, emerging market stocks and high yield bonds) because we remain more optimistic than the consensus about the sustainability of global economic recovery.
• Asset Allocation Views - March 2010
  As we enter the second quarter of 2010, our tactical position on equities and other cyclically sensitive assets remains bullish.
• Asset Allocation Views: March 2010
  Eugene Lancaric, Head of Macroeconomic Analysis for the ING Multi-Asset Strategies and Solutions Group, outlines the group’s new investment process, its economic outlook and current asset allocation rationale.
• Asset Allocation Views - February 2010
  To capture the opportunities that only a global approach to investment management can provide, the Multi-Asset Strategies and Solutions team has expanded its resources and adapted its process, allowing us to construct a broader and more detailed asset allocation model. Our new Model Portfolio — featured in the latest edition of Asset Allocation Views — provides more granular detail on our recommended asset allocation, both in terms of asset classes and global exposure. This new model should help convey our assessment of the relative attractiveness of global capital markets more accurately and more fully.
• Asset Allocation Views - January 2010
  We believe that consensus earnings estimates for S&P 500 companies should prove low if the economy evolves as we expect. We have therefore moved to an overweight position in large-cap core U.S. stocks and to an underweight in fixed income.