Each year, Allium conducts an Asset Allocation Study using J.P. Morgan’s Long-term Capital Market Assumptions to create our Strategic Asset Allocation Models.  These models provide an excellent framework that can be customized to meet client-specific needs. 

On rare occasions, the strategic allocations can materially change from one year to the next due to a variety of factors including market performance, interest rates, and economic indicators.  2022 to 2023 is a recent example where the difficult market environment in 2022 led to significantly different forward-looking assumptions as we entered 2023. 

It is more common for most asset classes to have minor adjustments to their risk/return expectations, resulting in no material changes to Allium’s Asset Allocation Models. This was the case for 2024. 

We don’t make market calls at Allium, but we do consider thoughtful insights and market rotations. While we consider the asset allocation targets to our models to be long-term in nature, insights and market rotations influence our portfolio “tilts." Asset class or investment style tilts are adjustments to portfolios to reflect nearer term factors – such as a tilt to value or growth. 

Two portfolio tilts are being implemented in many client portfolios currently.  Based on the risk/return expectation for U.S. large cap stocks vs. U.S. mid cap stocks, we expect to reduce U.S. large cap and increase U.S. mid cap where possible. In addition, we will work to incrementally extend the duration in many clients’ bond portfolios.

Click here to read our 2024 Asset Allocation Model study. Please reach out to me, Scott Thompson, or your Financial Advisor with any questions. 

Scott Thompson, CIO