A sketch of macro based asset allocation
Kollár, M.
Abstract:
This paper deals with the interaction between the macro-‐economy and financial markets. Various asset classes behave differently during different phases of the business cycle (or different inflation/growth macroeconomic dimensions) and neither asset class has been a top performer in each macroeconomic environment. We lay down a general case for macro-based asset allocation. The paper proposes that it might be reasonable to rebalance the portfolio based on the macroeconomic regime or a stage of the business cycle in order to produce stable returns with lower volatility than the traditional business cycle-neutral approach. We also claim that, among other things, bank credit growth is an important determinant of asset price fluctuations.
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APA citation
- Kollár, M. (2013). A sketch of macro based asset allocation. International Journal of Economic Sciences, 2(3), 101–120.