The persistent uncertainty in financial markets has raised questions on portfolio construction and how to invest across asset classes as 2025 nears. One long-term investor is now playing the market by staying invested and being well-diversified. “We believe it is key to remain invested and view any potential corrections as technical and temporary opportunities to get into the market,” Julius Baer International’s Portfolio Manager Aneka Beneby said. Speaking to CNBC Pro last month, Beneby reckoned that a global recession will “probably be avoided at this point, and it is more likely that growth will be fueled by a bumpy and modest cyclical recovery facilitated by falling interest rates.” Against this backdrop, she observes a “come back” in the traditional 60/40 portfolio, where 60% of funds are invested in equities and the remaining 40% is allocated to fixed income. Overweight equities Looking ahead, Beneby is overweight on equities and prefers the asset class to fixed income given relatively high inflation levels. Her comments come as the consumer price index — a key metric measuring inflation levels — rose 2.6% in the U.S. in October, versus a year ago. While the reading was in line with economists’ estimates, it is an uptick from the 2.4% reported in the preceding month. The portfolio manager expects structurally inflation globally, with levels in U.S. coming in at 3% or more next year, on the back of the “onshoring of supply chains, the energy transition and geopolitical flare ups.” “Higher inflation is what makes equities more attractive than fixed income,” she added. In terms of allocation, she is bullish on the U.S., but also sees opportunities elsewhere among companies with diversified revenue sources across geographies. Fixed income Unlike U.S. equity markets which have had a stellar rise, fixed income has been under pressure no thanks to high levels of volatility. The benchmark 10-year Treasury yield is currently hovering around 4.25% after retreating to a new low on Nov. 29 amid a shortened trading day for U.S. markets due to the Thanksgiving holiday. Looking at the movements, Beneby is betting on “shorter duration, triple B-rated companies in the U.S. and Europe.” These bonds typically have a maturation of between three to six years, she explained. Calling them “attractive,” the portfolio manager likes that such bonds have good fundamentals and low default rates. Beyond short duration bonds, Beneby is also looking at longer duration bonds and “high quality U.S. dollar bonds” paying a yield of around 5% to hedge against possible recession risks. Such bonds “mitigate some of that reinvestment risk at the shorter end while providing hedging qualities to the portfolio,” she explained. Gold Beyond the traditional assets, Beneby is also looking to allocate to gold amid macroeconomic uncertainties, mounting geopolitical tensions and a desire to hedge against inflation. Spot gold prices are now are now around $2,642, after edging up modestly on Tuesday on the back of a s trong U.S. labor report . Year-to-date, spot gold is now down around 0.12%, after a blistering rally in October and November . Central banks across non-G7 (Group of Seven) countries have also been “buying gold to protect themselves against possible sanctions and a debasing of the U.S. dollar,” Beneby noted. The G7 countries include Canada, France, Germany, Italy, Japan, the U.K., and the U.S. Aside from this, she observes that “rising debt levels undermine the US dollar as the world’s reserve currency.” “That’s going to be supportive for gold, longer term,” Beneby added.
Here’s how this Julius Baer portfolio manager is investing