Tactical Investment Strategy August 2020

Despite the ongoing congressional impasse over a Phase 4 fiscal package, risk assets continue to move higher on positive data and supportive policy. Our thesis for the third quarter remains the same: continued recovery in data but less surprises to the upside, and a continued commitment from policymakers to stay accommodative through 2020. This should keep the tone generally positive for risk markets, but with increased volatility given higher valuations, shifting Covid-19 infection rates, and the U.S. elections. As such, our strategies are appropriately positioned for our outlook with a modest overweight in equities across balanced strategies and an overweight to spread sectors within fixed income. As the quarter evolves, we expect to tone down risk as valuations rise and place an emphasis on security selection over broad beta risk.