Market IQ | Political and capital market insights

Access to thought-provoking views from DWS thought leaders can help investors identify and interpret trends and events influencing the markets and investment decisions.

Insights to help better inform portfolio construction decisions

Our Multi-Asset Investment Committee (MIC) brings together our multi-asset team members and other leaders across global asset classes, to develop portfolio solutions and robust investment outlooks that take into account a variety of market scenarios. The MIC utilizes the DWS global investment platform in order to cultivate investment ideas for the entire organization—and our clients.

Investment and research professionals

900

Each specializing in specific alpha sources, to generate a broad set of value-adding ideas through proprietary research

Signal providers

>50

Give an independent investment recommendation on their respective chief investment office (CIO) signal based on the investment and research professionals' idea and research

Asset classes

4+1

Fixed income, equities, alternatives, multi-asset + macroeconomic

Meet our tenured U.S. Multi-Asset Investment Committee

David-Bianco.jpg
David Bianco
Chief Investment Officer, Americas
Based in: New York
John Vojticek
John Vojticek
Head and Chief Investment Officer of Liquid Real Assets
Based in: Chicago
Darwei Kung
Darwei Kung
Head of US Multi-Asset, Commodities and Natural Resources
Based in: New York
Greg Staples
George Catrambone
Head of Fixed Income, North America
Based in: New York
 

Macro environment

The global policy rate easing cycle was in full effect in Q3 2024. The US Fed, ECB, and PBOC all lowered policy rates throughout the quarter, while the Bank of Japan raised its short-term policy rate to 0.25%. US economic growth topped expectations while inflation moderated to below 2.6% y/y in August. The Bank of Japan’s shock interest rate hike in July shook global markets as billions of dollars in Yen carry trades were unwound, causing a flash correction in risk assets. This was followed by a recovery in risk assets supported by growing expectations and realization of a 50-basis point rate cut by the US Federal Reserve in September 2024. China’s late September fiscal and monetary stimulus spurred a major rally in Chinese equities, China-sensitive commodities, emerging markets equities, and Asia-Pacific equities. In Europe, the ECB continued to battle inflation and support a recovery from near-zero GDP growth in 2023. European GDP growth is expected to reach 0.8% this year. Finally, emerging market economic growth remained steady in the quarter as supported by the global easing cycle. EM (ex-China) economies are expected to grow by 3.9% in 2024 and 4.3% in 2025.

Global equities performance was volatile but positive in Q3, as the MSCI All Country World Index returned 6.72%. Interest rate decisions from each of the largest central banks moved individual and broad markets throughout the quarter. In the US, the S&P 500’s 5.89% return was topped by the interest-rate sensitive Russell 2000’s 9.27% quarterly return. The Nasdaq 100 index lagged, returning only 2.12%. Internationally, the MSCI Emerging Markets Index returned a strong 8.82% behind Chinese monetary and fiscal stimulus while the MSCI Europe Index was the global laggard with a 2.41% return.

Fixed income assets enjoyed strong, low volatility returns in Q3 as supported by global policy rate easing. For the quarter, the Bloomberg US Treasury Index returned 4.74%. The Bloomberg US Corporate Bond Index and the Bloomberg US High Yield returned 5.84% and 5.28%, respectively, with spreads widening initially before compressing to once again revisit levels not seen since 2008. Outside the US, the Bloomberg EM Hard Currency Index returned 6.09%% while the Bloomberg Global Aggregate Index rallied back from a Q2 loss to return 6.98%.

Portfolio positioning

Timely investment outlooks and relevant allocation recommendations

Risk assets continued their ascent in Q3 2024, with strong positive performance across equities, fixed income, and alternatives. Q3 was an especially strong quarter for real assets and fixed income assets. These and other interest rate-sensitive assets rallied behind supportive US inflation and jobs data alongside the anticipation of interest rate cuts from the US Fed, which delivered a 0.5 percent cut to the Federal Funds rate on September 18th. We are now cautious on risky assets and have moved to an underweight to equities and fixed income with an overweight to alternatives. While the Fed has maintained a dovish tone on US interest rates, we see the market’s current interest rate expectations being accompanied by or even requiring a material weakening of the US economic environment. Additionally, we remain cautious of the possible volatility and asset pricing effects of the upcoming 2024 US elections on November 5th, 2024.  

Within equities, we remain underweight in both US large cap and small cap equities as we find US equities valuations demanding following the rally in Q2. While valuations may not currently be the main driver of the market narrative, the S&P 500’s nearly 30x P/E ratio may pose a challenge to momentum once companies begin to release their 2Q24 earnings results. We will remain vigilant, however, because high valuations may soon become more justifiable as treasury yields fall throughout the Fed’s rate cutting cycle and create a more supportive cost of equity environment for stocks. Breadth also remains an issue for US equities, as we see slowing sales and a lack of profitability from non-tech large cap companies.

We enter Q4 2024 with an underweight to our fixed income allocation, but a neutral preference for duration as expressed through a 5s30s stepeener. The Fed looks to be pivoting to a singular focus on unemployment after successfully countering inflation with restrictive monetary policy. As the Fed’s cutting cycle begins, the bond market is pricing in nearly 8 additional cuts before year-end 2025 and a terminal rate of around 3%. We find these expectations demanding and remain wary of a sell-off or flattening in the Treasuries curve should there be a change in Fed signaling or economic trends. We are also allocating to US TIPs from nominal Treasuries to take advantage of attractively low breakevens. Finally, we choose to underweight US high yield credit following an overextended rally in spreads.

We are overweight alternatives with a preference for infrastructure and natural resources over commodities and REITs. With the strong recent performance, we see infrastructure as a suitable defensive selection within real assets. While monetary easing in the US and other developed countries should bring continued interest in real assets, the near-term catalysts following last quarter’s strong rally are now limited. Commodities and natural resources equities also posted strong gains to end Q3 2024. Chinese monetary and fiscal stimulus reinvigorated the demand case for the energy and metals complex. The combination of monetary easing cycles from central banks in the US, China, and Europe makes us positive on the commodities complex in the medium term and beyond.

DWS allocation views for dynamic portfolio construction:

Our investment ideas include broad and targeted solutions that we believe are well positioned for the current market environment. As of 09/30/2024, the US MIC portfolios were underweight equities, underweight fixed income, and overweight alternatives, which reflects our global macroeconomic outlook.  

Legend:

U.S. MIC

Benchmark allocation


Asset type Region Asset class U.S. MIC vs benchmark allocations Broad solutions Targeted solutions
Equity total
57.00
58.50
Equity Developed markets U.S. large caps
36.00
37.00
U.S. small caps
2.50
4.00
European equities
8.00
8.00
Japanese equities
4.00
3.00
Asia Pacific ex-Japan equities
1.50
1.50
Emerging
markets
Emerging market equities
5.00
5.00
Emerging markets Asia equities
0.00
0.00
Fixed income total
30.00
31.50
Fixed income U.S. U.S. Treasuries
4.50
7.00


U.S. TIPS
1.00
0.00
U.S. securitized bonds
6.50
6.00
U.S. investment-grade corporates
8.00
8.00
U.S. high yield bonds
3.00
3.50
Non-U.S. developed Global ex-U.S. developed bonds
4.50
4.50


Emerging
markets
Global emerging-markets bonds
2.50
2.50
Alternatives total
12.00
10.00
Alternatives
 
Global Natural Resources
1.00
0.00
Global Commodities
1.00
1.50
Global Infrastructure
4.50
2.50
Global Developed real estate
3.00
6.00
U.S. Real estate/REITs
2.50
0.00
Cash total
1.00
0.00
100.0

Allocations are subject to change. Please note certain information contained herein constitutes forward-looking statements. Due to various risks, uncertainties and assumptions made in our analysis, actual events or results or the actual performance of the markets may differ materially from those described. The information herein reflect our current views only, are subject to change, and are not intended to be promissory or relied upon by the reader. There can be no certainty that events will turn out as we have opined herein.

Legend:

U.S. MIC

Benchmark allocation


Asset type Region Asset class U.S. MIC vs benchmark allocations Broad solutions Targeted solutions
Equity total
37.75
38.50
Equity Developed markets U.S. large caps
24.00
24.50
U.S. small caps
1.50
2.50
European equities
5.00
5.00
Japanese equities
2.75
2.00
Asia Pacific ex-Japan equities
1.00
1.00
Emerging
markets
Emerging market equities
3.50
3.50
Emerging markets Asia equities
0.00
0.00
Fixed income total
54.25
56.50
Fixed income U.S. U.S. Treasuries
6.75
11.00


U.S. TIPS
1.75
0.00
U.S. securitized bonds
12.00
11.00
U.S. investment-grade corporates
14.25
14.00
U.S. high yield bonds
5.00
6.00
Non-U.S. developed Global ex-U.S. developed bonds
9.00
9.00


Emerging
markets
Global emerging-markets bonds
5.50
5.50
Alternatives total
6.00
5.00
Alternatives
 
Global Natural Resources
0.50
0.00
Global Commodities
0.75
1.00
Global Infrastructure
2.00
1.00
Global Developed real estate
1.50
3.00
U.S. Real estate/REITs
1.25
0.00
Cash total
2.00
0.00
100.0

Allocations are subject to change. Please note certain information contained herein constitutes forward-looking statements. Due to various risks, uncertainties and assumptions made in our analysis, actual events or results or the actual performance of the markets may differ materially from those described. The information herein reflect our current views only, are subject to change, and are not intended to be promissory or relied upon by the reader. There can be no certainty that events will turn out as we have opined herein.

Legend:

U.S. MIC

Benchmark allocation


Asset type Region Asset class U.S. MIC vs benchmark allocations Broad solutions Targeted solutions
Equity total
78.25
80.50
Equity Developed markets U.S. large caps
49.50
51.00
U.S. small caps
3.25
5.50
European equities
11.00
11.00
Japanese equities
5.50
4.00
Asia Pacific ex-Japan equities
2.00
2.00
Emerging
markets
Emerging market equities
7.00
7.00
Emerging markets Asia equities
0.00
0.00
Fixed income total
11.50
13.00
Fixed income U.S. U.S. Treasuries
1.25
2.50


U.S. TIPS
0.50
0.00
U.S. securitized bonds
2.50
2.50
U.S. investment-grade corporates
3.75
4.00
U.S. high yield bonds
2.00
2.50
Non-U.S. developed Global ex-U.S. developed bonds
1.50
1.50


Emerging
markets
Global emerging-markets bonds
0.00
0.00
Alternatives total
8.50
6.50
Alternatives
 
Global Natural Resources
0.75
0.00
Global Commodities
0.75
1.00
Global Infrastructure
3.00
1.50
Global Developed real estate
2.25
4.00
U.S. Real estate/REITs
1.75
0.00
Cash total
1.75
0.00
100.0

Allocations are subject to change. Please note certain information contained herein constitutes forward-looking statements. Due to various risks, uncertainties and assumptions made in our analysis, actual events or results or the actual performance of the markets may differ materially from those described. The information herein reflect our current views only, are subject to change, and are not intended to be promissory or relied upon by the reader. There can be no certainty that events will turn out as we have opined herein.

Equities

Within equities, we are underweight US large and small caps, neutral in emerging markets, and overweight in Japanese equities.  

Equities

Fixed income

We are underweighting nominal US treasuries and US high yield credit and overweight in US TIPs and US securitized bonds.  

Fixed income

Alternatives

We are overweight within alternatives with a preference for infrastructure and natural resources over commodities and REITs.  

Alternatives

DWS portfolio allocation resources

DWS Long View - 2024

The return outlook for the next decade
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Additional resources

CIO View