Asset allocation November 2013

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | December 12, 2013

Changes over previous allocations:

1. Remain modestly overweight equities, expect equities to outperform bonds; Central Banks remain accommodative. Leading indicators are improving, suggesting better global growth ahead. Expect cash and fixed income to underperform; continue to favor absolute return strategies.

2. Remain underweight U.S. equity allocations mainly on relative valuation (limited near-term upside). Better opportunities in select international equities.

3. Continue to favor UK and eurozone on better economic momentum; short-term valuations have run up a bit but still supportive longer term.

4. Continue to favor Japan on favorable monetary and macro conditions; earnings momentum has waned of late.

5. Downgrade EM equities to neutral; while global liquidity is high as U.S. monetary conditions are supportive in the short term; valuations supportive, somewhat stable macro conditions; sentiment remains negative.

6. Downgrade to securitized sector on valuation concerns and potential sell off as tapering begins. Allocated to investment-grade bonds.

7. Downgrade to commodities as supply demand picture remains weak, roll yields have turned negative, ETF sell off continues.

Chart: Asset Allocation Positioning, November 15, 2013

Source: Columbia Management Investment Advisers, LLC. Investment Strategy Outlook reflects the views of the Global Asset Allocation team as of November 15, 2013. Asset classes are ranked from 1 (overweight) to 5 (underweight), with 3 representing a neutral allocation.