An economy’s ability to absorb a shock depends on the economic momentum going into the shock, and the size and duration of that shock.
While the risk of global slowdown appears subjectively less than 40% in the coming 12months, that relies on the consensus view of there been an expedient resolution to shipping transiting the Strait of Hormuz.
We retain a cautiously neutral allocation, with portfolios in line with their long-term target mix between growth and defensive investments. Caution is expressed by seeking lower volatility investment strategies and lower business cycle correlation within asset class groups.