Portfolio Building

Recent market volatility and the conflict in Iran have understandably pushed many emerging market investors to the sidelines. But periods of uncertainty have historically offered attractive entry points into emerging market debt (EMD), particularly when underlying fundamentals are improving and asset flows are likely to increase.

Since early April, U.S. stocks have rallied sharply despite an ongoing war, rising inflation fueled by soaring oil prices (near $100/barrel), higher bond yields (up 0.6 to 0.7 percentage points), and frothy valuations (21 times projected earnings vs. a historical average of 17 times for the S&P 500 Index).

On the surface, last week looked engineered to embarrass our positioning. The dollar index climbed to a six-week high above 99.3 by Friday and finished the week roughly flat at those levels.

This persistent growth highlights how central low-cost core index products remain to advisor and retail portfolios alike. Even as asset managers roll out specialized strategies, capital continues to flow within broad-market beta.

In a relatively light week for traditional economic data, a mix of corporate earnings, business surveys, Federal Reserve minutes, and the latest read on the consumer from the University of Michigan helped paint an increasingly clear picture for investors.

The push for international equities diversification continues amid shifting global macroeconomic conditions. These days, investors have more options when it comes to international exposure. Given the current market uncertainty, they may want to put quality at the forefront of their decision-making process.

The artificial intelligence (AI) boom has transitioned from an equity market narrative to a defining force in fixed income. Hyperscalers (Amazon (AMZN), Alphabet (GOOG/L), Meta (META), Microsoft (MSFT), and Oracle (ORCL)) are shifting from internal cash flows to substantial bond issuance to fund massive data center, graphics processing unit (GPU), and power infrastructure buildouts.

Thanks to strong gains in markets over recent years, the 60/40 default portfolio has quietly morphed into a bundle of expensive U.S. growth equities and credit exposures offering narrow spreads over Treasuries.

Chris Galipeau discusses high-conviction insights that go beyond media headlines.

After three decades of watching market cycles play out from both sides of the trade, I’ve come to a simple conclusion: Wall Street’s love of simple rules is one of the most dangerous aspects of investing.

Global equity markets moved modestly higher this week as first-quarter earnings season continued to deliver strong results.

Despite headwinds from rising oil prices, fundamentals have remained strong. The S&P 500 has notched 18 record highs year to date and, more importantly, surpassed our prior target of 7,250. Following a standout 1Q earnings season, we are raising our 2026 earnings per share (EPS) estimate to $326 from $300.

This piece examines the distinction between volatility and drawdown risk in portfolio construction, and why managing routine market fluctuations may not address the drivers of long-term wealth outcomes. The article is attached as a Word document, and the related chart is included as a separate image file.

Private markets (private equity, private credit and real estate) have historically delivered an “illiquidity premium”. Institutions and family offices have recognized this illiquidity premium and have historically allocated significant capital to capture it.

In this video, Chuck Carnevale explains why he believes a diversified dividend-growth stock portfolio can be a better long-term strategy for retirees than the traditional 60/40 stock-and-bond allocation. Using a real-world portfolio he created in August 2021, Chuck demonstrates how an all-equity income portfolio can provide both rising income and capital appreciation while helping investors stay ahead of inflation.

After a slowdown earlier in the year, stronger April and May data support the view that weakness in January and February, followed by a rebound in March, was largely weather-related rather than the start of a broader deterioration in housing demand.

Now, that prospect feels much farther off. Indeed, as government debt grows and macroeconomic pressures and inflation reemerge, investors face a complicated rate environment. Dividends can provide a solution.

In this second quarter update, Western Asset believes global fixed-income markets face a more complex backdrop as geopolitics, rapid AI adoption and private credit scrutiny intersect.

Chasing performance by deviating from a benchmark has long been the hallmark of active managers. But it may be time for a rethink. Our research suggests that investors allocating to core equities should consider refreshing the criteria they use to identify portfolio managers that can consistently beat their benchmarks.

For private equity firms, capital flexibility is prized today. Merger-and-acquisition (M&A) activity has cooled, while commodity prices and artificial intelligence (AI)-driven disruption have heated up, creating uncertainty for investors. This makes it more challenging to sell portfolio companies, so private equity firms are holding investments longer. As a result, many firms are turning to net asset value (NAV) loans for capital needs.

I still don’t think the Fed is close to a rate hike, but for the upcoming June FOMC meeting, a shift in the language of the policy statement from an easing bias to one of a ‘balanced’ outlook seems to be the most likely scenario. However, the fed funds futures market has now fully priced in a rate hike for March 2027, a remarkable shift from its pre-war status of discounting almost three rate cuts for the same timeframe.

Industry discussions on Janus Henderson’s ETF lineup are typically centered around its fixed income funds given the firm’s history in this asset class. However, the issuer also has equity ETFs that are garnering attention, which include a fund that’s close to crossing the $1 billion assets under management (AUM) threshold: the Janus Henderson Small-Mid Cap Growth Alpha ETF (JSMD).

Stephen Dover shares key insights from the Franklin Equity team about how artificial intelligence is changing the economics of the software industry.

Some institutional investors who had grown accustomed to outperforming the broader private equity composites are finding they have not done so consistently in recent years. Their diagnoses of the problem often center on specific decisions or biases they made in their recent manager selection, whereas a likely culprit is a falloff in the persistence of outperformance among private equity managers.

Recently, Matthew Bartolini, global head of research strategists at State Street Investment Management, sat down with VettaFi to discuss where inflation stands, opportunities within portfolio construction, and much more.

Concerned about overfunding your 529 plan? Discover the strategic flexibility of modern 529 accounts. From tax-free Roth IRA transfers to building a multi-generational educational legacy, learn how to maximize your unused education savings for long-term wealth building.

From the April payroll report released on May 8, we realize that not all industries are equally impacted by AI. Diagnostic imaging centers, an area where AI is thought to replace humans, have increased demand for workers, whereas bookkeeping demand has declined in recent years.

Global bond yields are reaching frightening levels due to the continued war in Iran and the effective closure of the Strait of Hormuz. Continued high oil prices and the threat of reverberating inflation are causing investors to demand higher yields on government bonds.

Equities advanced in April, but hedges remain few and far between, as traditional risk mitigants like bonds and gold continue to show a correlation with stocks.

Watching your children step into financial independence is one of the most rewarding and complex milestones families experience. As young adults begin earning income, managing expenses, and making major life decisions, the habits and financial knowledge they develop can shape their long-term success.

Sustainable investing in fixed income has come of age. Against a backdrop of heightened geopolitical tensions, persistent economic and trade uncertainty, sustainable fixed income continued to demonstrate its appeal in 2025.

Emerging markets (EM) are using low-cost renewables to cut fuel imports, stabilize power costs and improve energy security—positioning EM as the growth engine of the energy transition. Countries and companies that leverage their dominance in critical minerals and green technology could pull ahead, creating dispersion in potential outcomes for investors.

Model portfolios are a key pillar for asset managers competing for advisor and investor attention. They offer straightforward, pre-packaged tools that help investors target and achieve specific financial goals. Designing and operating models, however, takes a particular set of skills. Goldman Sachs Asset Management recently made a big hire therein.

With mega tech AI capital expenditure projected to cross a staggering $660 billion to $750 billion, according to estimates from firms like Goldman Sachs, CreditSights and Bloomberg, saying the stakes are high for Nvidia and the AI ecosystem is an understatement. It’s no wonder we can focus on little else this week.

While most institutional investors recognize that private equity and public equity share similar economic risks, they often seem to ignore how their aggregate equity portfolio is affected by their substantial allocation to private equity.

In the past year, new models from industry leaders have continued to boost AI’s capabilities. According to various capabilities tests, Anthropic’s Mythos model has leapfrogged other AI models – including in the ability to thwart or support cyberattacks.

Right now, AAI’s two highest 10-year expected return forecasts are for large-cap value equity strategies outside the United States—Emerging Markets RAFI and Dev ex US Large RAFI. AAI’s expected return model anticipates valuations for equity strategies to mean revert and therefore tends to elevate out-of-favor regions and styles, predicting higher future returns for recently underperforming equity indices.

Enterprise software is undergoing its most significant reset in a generation. Artificial intelligence (AI) is reallocating value within software—creating clear winners and exposing vulnerabilities in business models that have worked well for the past two decades. We believe investors who treat software as a uniform asset class will make costly mistakes.

GMO has posted a new 7-Year asset class forecast as of April 30, 2026.

Institutional investors have spent years hearing about the promise of artificial intelligence. That phase is giving way to a more practical question: not whether AI can create more scale, but whether that scale can be governed, validated, and translated into better fiduciary decisions. For OCIO providers, AI without discipline is not an advantage.

In fixed income investing, trade execution plays an important role in overall portfolio performance. The ability to source bonds efficiently, invest capital thoughtfully and execute trades at competitive prices can directly affect investor returns.

LPL Research examines rising inflation risks amid geopolitical tensions, while resilient growth and strong investment support continued expansion.

The "four horsemen" of the labor market are the unemployment rate, hiring rate, layoff rate, and vacancy rate. Analyzing them together may sharpen investors' read on the economy.

The rapid deployment of artificial intelligence (AI) is evident; 99% of CEOs say their companies are investing in the technology. Apparently, AI is also quick at garnering assets. Launched less than three months ago, the Pictet AI Enhanced US Equity ETF (PQUS) is already approaching the $100 million mark in assets under management (AUM).

On Friday, May 15, the 10-year Treasury yield closed at 4.59%, its highest level since February 2025. The 30-year Treasury yield closed near 5.12%, a level last seen in 2007. Those are significant moves because they reflect a repricing of the market’s inflation, growth, and Federal Reserve expectations.

Chris Galipeau discusses high-conviction insights that go beyond media headlines.

For shareholders, the upside justifies the gamble. For bondholders, the downside is real and the upside belongs to someone else. That wedge – the classic asset substitution problem – is what credit investors are increasingly pricing, and until the re-leveraging impulse shows signs of reaching a plateau, the divergence across the capital structure is likely here to stay.

Emerging market debt is compelling as a medium‑term structural allocation, particularly for investors seeking to diversify away from concentrated U.S. exposures.

As inflation lingers and market dynamics shift, advisors are rethinking the 60/40 portfolio with managed futures and options income ETFs.

A frequently asked question in recent weeks is whether the market is simply ignoring the risks stemming from the current geopolitical conflict, especially given the spike in oil prices that has pushed inflation pressures higher.

In this thought provoking presentation, Chuck Carnevale, co founder of FAST Graphs and widely known as “Mr. Valuation,” challenges one of Wall Street’s most accepted investing principles, the traditional 60/40 portfolio split between stocks and bonds. Drawing from decades of investment experience, Chuck explains why he believes blindly allocating large portions of retirement assets to fixed income may actually increase long term financial risk rather than reduce it.

The summit in Beijing between US President Donald Trump and Chinese President Xi Jinping delivered little in the way of diplomatic breakthroughs but bears important cross-asset implications.

As Kevin Warsh takes over as Federal Reserve chair with his own goals, he may face challenges even beyond rate policy, from inflation to independence to a bulbous balance sheet.

Leadership transitions at the Federal Reserve (Fed) are rare. Only seven individuals have served as Fed chair since the 1970s, underscoring how infrequent turnover is at the Fed’s top job. That rarity is why investors pay close attention when a new chair is appointed, especially when the incoming leader brings a different perspective. Kevin Warsh has been a vocal critic of Fed policy and communication in recent years.

Kevin Warsh was confirmed this week as the next Chair of the Federal Reserve’s Board of Governors. As we discussed in a recent article, his transition comes at a delicate time; inflation is rising, and questions about the Fed’s independence are pressing. The honeymoon period will be brief.

Vanguard research suggests that one practical answer may lie in pairing traditional target-date funds with a modest allocation to deferred-income annuities (DIAs).

The stagflation narrative dominating financial social media isn’t completely wrong. That’s what makes it so dangerous. After more than 30 years of managing client portfolios through actual inflationary cycles, not watching them on YouTube, I’ve learned that the most damaging investment advice isn’t built on outright lies.

First quarter 2026 earnings were stronger than expected and we think that there might be continued strength in the second quarter, unless there is a major macro shift.

US equities continue to march higher in 2026 despite geopolitical uncertainties, supported by resilient economic data and strong corporate earnings. Much of the market narrative remains focused on mega-cap technology and artificial intelligence (AI).

Yes, this time is different, but not because inflation itself is unprecedented. What has fundamentally changed is the macroeconomic starting point. Unlike the post-Global Financial Crisis period, when persistent disinflation and repeated downside surprises dominated policy decisions, the economy today is operating in a world where structural disinflation is no longer the default backdrop.

In our Q2 Equity Market Outlook, we identified healthcare as one area where artificial intelligence (AI) is having tangible benefits and presenting investors with new expressions of the AI investment theme. While healthcare may glean some luster from an AI halo, the investment case is also one of counterbalance to the AI juggernaut.

For many ultra-high-net-worth families, philanthropy is not simply about giving; it is about creating meaningful, lasting impact. A thoughtfully structured family foundation can become a powerful vehicle for aligning wealth with values, supporting communities, and engaging future generations in purposeful stewardship.

David Mann, our Head of Global Exchange-Traded Funds (ETFs) Product and Capital Markets, explains how meatloaf—the dish, not the singer—serves as a perfect example of how his ETF thinking has evolved over the past decade.

ClearBridge Investments: The ongoing energy crisis is pushing global oil inventories, including many critical product inventories, toward all-time lows, and it may be time to position portfolios given the potential for supply shortages to emerge.