The global economy appears to have entered a new phase — one of synchronized sustainability — but markets have been rising, and much of the good news is reflected in asset prices, particularly in the U.S. These conditions raise a number of questions heading into 2018: Where are we in the economic cycle? Is the U.S. priced for perfection? Have investors missed the rally in European equities? Will rising inflation impact asset prices? Here are key investment themes to consider and guidance on positioning portfolios for 2018:
Equity portfolios at Capital Group are constructed through individual security selection based on fundamental, bottom-up global research, rather than top-down tactical shifts. Through this bottom-up process, a number of themes have emerged. The table below shows shifts in regional equity weightings over the past six months across American Funds equity-focused portfolios. The shifts represent any allocations of 1% or greater during the period. Emerging markets exposure has been added across strategies, while European exposure has generally been increased and the reverse has been true with regard to U.S. exposure.