Multi Asset

Despite our view that a U.S. economic contraction is avoidable in the near term, the outlook for equities has deteriorated since the beginning of the year and we think this sour spot is likely to last as monetary policy becomes tighter.

Russia’s energy tentacles, intertwined throughout Europe’s power network, may prove difficult to excise.

Should the Russia-Ukraine conflict persist, it would lead to further tightening of financial conditions but is unlikely to deter the Federal Reserve from a 25 basis point interest rate hike in March. Tighter conditions will slow economic growth at the margins and constrain financial markets over the short term, but not over the longer term.

• Economic recovery likely undeterred: Rising energy prices add risk to Europe’s recovery but are unlikely to derail the global economic recovery.
• Expect further equity volatility: We see the strongest impacts in commodities, energy and financials, but focus should shift quickly to interest rates and supply-chain resolution.
• Seeing value amid spread widening: We believe the impact of Russia’s actions on fixed income markets has largely played out, and any further widening in credit spreads could present opportunities.

We see scope for continued global equity gains as the impacts from Covid, policy stimulus and inflation diminish. The current balance of market factors keeps us overweight U.S. large cap stocks.

Voya’s 2022 Capital Market Assumptions are a key input into our strategic asset allocation process for multi-asset portfolios. 

Voya’s approach examines the benefits of incorporating alternatives in target date funds by integrating within glide path design critical elements such as risk premia, skill premia and excess returns relative to fees.

Harnessing alpha and diversification potential through efficient portfolio construction

Though the inflation debate continues, we concur with the Federal Reserve that price increases will be manageable. We believe the Fed can conduct monetary operations along its well communicated path, paving the way for reaccelerating, above-trend 4Q21 real GDP growth.

For skeptics who have yet to take the Federal Reserve at its word, its response to recent inflation data should be another indicator that policymakers are in no hurry to deviate from their path of easy monetary policy.