Summary

We have three strategic asset-allocation models, based on risk-tolerance: Conservative, Growth, and Aggressive. The following is a discussion of the growth segment. Equity investors have enjoyed 2024, with a year-to-date gain in the S&P 500 of about 20%. The fixed-income benchmark ETF AGG has risen 2.0%. Our Stock-Bond Barometer modestly favors stocks over bonds for long-term positioning. In other words, these asset classes should be near their target weights in diversified portfolios, with a slight tilt toward equities given the recent decline in interest rates. We are over-weight large-caps, despite a recent surge by small-caps. We favor large-caps for growth and financial strength, while small-caps offer value. Our recommended exposure to small- and mid-caps is 10%-15% of equity allocation, below the benchmark weighting. U.S. stocks have outperformed global stocks over the trailing one- and five-year periods. We expect this trend to continue, given volatile global economic, political, geopolitical and currency conditions. That said, international stocks offer favorable near-term valuations, and we target 5%-10% of equity exposure to the group. Growth has rebounded in 2024, outperforming value as interest rates stabilized. Over the longer term, we anticipate that growth, led by the IT and Healthcare sectors, will top returns from valu