Paragon is a portfolio analysis, risk assessment, and goal optimization tool. The Paragon report uses hypothetical examples in conjunction with forecasts for inflation, economic growth, and asset class returns, volatility, and correlation and provides you with general financial planning information and serves as one tool in helping you develop a strategy for pursuing your financial goals. It is not intended to provide specific legal, investment, accounting, tax, or other professional advice. For specific advice on these aspects of your investments, you should consult your professional advisors.

© 2022 M&T Bank and its affiliates and subsidiaries. All rights reserved.
Wilmington Trust is a registered service mark used in connection with various fiduciary and non-fiduciary services offered by certain subsidiaries of M&T Bank Corporation including, but not limited to, Manufacturers & Traders Trust Company (M&T Bank), Wilmington Trust Company (WTC) operating in Delaware only, Wilmington Trust, N.A. (WTNA), Wilmington Trust Investment Advisors, Inc. (WTIA), Wilmington Funds Management Corporation (WFMC), and Wilmington Trust Investment Management, LLC (WTIM). Such services include trustee, custodial, agency, investment management, and other services. Loans, credit cards, retail and business deposits, and other business and personal banking services and products are offered by M&T Bank, member FDIC.

M&T Bank Corporation’s European subsidiaries (Wilmington Trust (UK) Limited, Wilmington Trust (London) Limited, Wilmington Trust SP Services (London) Limited, Wilmington Trust SP Services (Dublin) Limited, Wilmington Trust SP Services (Frankfurt) GmbH and Wilmington Trust SAS) provide international corporate and institutional services.

WTIA, WFMC, and WTIM are investment advisers registered with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply any level of skill or training. Additional Information about WTIA, WFMC, and WTIM is also available on the SEC's website at adviserinfo.sec.gov.

Wilmington Trust Investment Advisors, Inc's Capital Markets Forecast is provided for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service or as a recommendation or determination that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on the investor's objectives, financial situation, and particular needs. The investments or investment strategies discussed herein may not be suitable for every investor. The material is not designed or intended to provide legal, investment, or other professional advice since such advice always requires consideration of individual circumstances. If legal, investment, or other professional assistance is needed, the services of an attorney or other professional should be sought.

Wilmington Trust is not authorized to and does not provide legal or tax advice. Our advice and recommendations provided to you is illustrative only and subject to the opinions and advice of your own attorney, tax advisor or other professional advisor.

The forecasts presented herein constitute the informed judgments and opinions of Wilmington Trust about likely future capital market performance. Forecasts are subject to a number of assumptions regarding future returns, volatility, and the interrelationship (correlation) of asset classes. Assumptions may vary by asset class. Actual events or results may differ from underlying estimates or assumptions, which are subject to various risks and uncertainties. No assurance can be given as to actual future market results or the results of Wilmington Trust's investment products and strategies. The estimates contained in this presentation constitute Wilmington Trust's judgment as of the date of these materials and are subject to change without notice. The information in this presentation has been obtained or derived from sources believed to be reliable, but no representation is made as to its accuracy or completeness.

Securities listed or mentioned are provided for illustrative purposes only and are not intended to be representative of current recommendations or holdings. It should not be assumed that these securities were or will be profitable.

Reference to the company names mentioned in this material are merely for explaining the market view and should not be construed as investment advice or investment recommendations of those companies.

Diversification does not ensure a profit or guarantee against a loss.

Some investment products may be available only to certain "qualified investors"—that is, investors who meet certain income and/or investable asset thresholds. Any offer will be made only in connection with the delivery of the appropriate offering documents, which are available to prequalified persons upon request. '

Indices are not available for direct investment. Investment in a security or strategy designed to replicate the performance of an index will incur expenses, such as management fees and transaction costs, that would reduce returns.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

The gold industry can be significantly affected by international monetary and political developments as well as supply and demand for gold and operational costs associated with mining.

Financial Advisors are investment advisor representatives of, and offer securities and advisory services through, LPL Financial LLC (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Wilmington Advisors @ M&T is a brand name used by LPL representatives to offer securities, advisory, and insurance services and is not a separate legal entity. Registered representatives of LPL using the Wilmington Advisors @ M&T name are employees of M&T Bank. LPL and its affiliates are entities separate from, and not affiliates of, M&T Bank. Securities and insurance offered through LPL or its affiliates are:

Not Insured by FDIC or Any Other Government Agency | Not Bank Guaranteed | Not Bank Deposits or Obligations | May Lose Value

Private Banking is the marketing name for an offering of M&T Bank deposit and loan products and services.

M&T Bank   Equal Housing Lender. Bank NMLS #381076. Member FDIC.

Investment and Insurance Products   • Are NOT Deposits  • Are NOT FDIC Insured  • Are NOT Insured By Any Federal Government Agency  • Have NO Bank Guarantee  • May Go Down In Value

Investing involves risks and you may incur a profit or a loss. Past performance cannot guarantee future results. This material is provided for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. It is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances. There is no assurance the any investment, financial or estate planning strategy will be successful.

Wilmington Trust Emerald Family Office and Advisory is a service mark and refers to wealth planning, family office, specialized transaction and other services provided by Wilmington Trust, N.A., a member of the M&T family.  

2022 Investment playbook

Unique cycles call for a new take on the typical investment playbook. In light of the current resource disorder and inflation concerns, here’s where the economic rubber meets the investment road.

As noted in the section on Cycles, we purposefully concentrate on the nuances of the economic cycle. Years of experience have taught us that viewing a portfolio first through an economic lens can provide clarity and structure to an investment process.

The approach starts with economic analysis, upon which we layer myriad market and strategy considerations. While history provides a reference, we know each economic cycle is unique. The resource disorder and attendant inflation concerns plaguing this cycle are the most distinguishable factors altering our investment playbook.

Highlights:

  • The Deceleration stage has been the most frequent and is once again where we find ourselves today
  • The best returns for risk assets, including large-cap, small-cap, and cyclical equities have occurred during the Troughing stage of the economy
  • The Deceleration stage has historically delivered modest albeit positive average monthly returns across almost every asset class, sector, and factor, despite the economy’s strongest growth being in the rearview mirror
  • Diversification is paramount

Building resilient portfolios

Our base case for the year ahead is above-trend U.S. economic growth of 3.5%, with inflation moderating over the next 12 months. The economy is supported by a recovering labor market, strong capital expenditures, and an inventory-rebuild cycle. Deployment of technology is aiding corporate productivity and profitability. Barring a widespread resurgence of another COVID-19 variant post Omicron, we expect interest rates to move higher, with the 10-year Treasury approaching 2% on a 9–12-month horizon. We hold an overweight allocation to equities, versus our long-term strategic benchmark, and an underweight to fixed income. Portfolios hold a slightly elevated level of tactical cash to be deployed opportunistically in the months ahead.

Data as of 11/30/2021 and based on the High Net Worth portfolios holding municipal bonds (Growth & Income risk profile):

Tactical tilts Positioning Underweight Neutral Overweight

Equities U.S. Large Cap

Overweight

Equities U.S. Small Cap

Overweight

Equities International Developed

Overweight

Equities Emerging Markets

Overweight

Tax-Exempt Fixed Income Investment Grade

Underweight

Tax-Exempt Fixed Income High Yield

Neutral

Real Assets

Underweight

Alternatives

Underweight

Cash

Overweight

Understanding the charts

Current tactical (short-term) positioning to that asset class is underweight versus our long-term strategic target. The further from the N (neutral), the more underweight.

Current tactical positioning to that asset class is neutral versus our long-term strategic target.

Current tactical positioning to that asset class is overweight versus our long-term strategic target. The further from N, the more overweight.

This material is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service or a recommendation or determination that any investment strategy is suitable for a specific investor. Opinions, estimates, and projections constitute the judgment of Wilmington Trust Investment Advisors, Inc. and are subject to change without notice. Allocations presume a long-term investment horizon. Source: WTIA.

An overview of our asset allocation strategies

Wilmington Trust offers seven asset allocation models for taxable (high-net-worth) and tax-exempt (institutional) investors across five strategies reflecting a range of investment objectives and risk tolerances: Aggressive, Growth, Growth & Income, Income & Growth, and Conservative. The seven models are High-Net-Worth (HNW), HNW with Liquid Alternatives, HNW with Private Markets, HNW Tax Advantaged, Institutional, Institutional with Hedge LP, and Institutional with Private Markets. As the names imply, the strategies vary with the type and degree of exposure to hedge strategies and private market exposure, as well as with the focus on taxable or tax-exempt income. On a quarterly basis we publish the results of all of these strategy models versus benchmarks representing strategic implementation without tactical tilts. Model strategies may include exposure to the following asset classes: U.S. large-capitalization stocks, U.S. small-cap stocks, developed international stocks, emerging markets stocks, U.S. and international real asset securities (including inflation-linked bonds and commodity-related and real estate-related securities), U.S. and international investment-grade bonds (corporate for Institutional or Tax Advantaged, municipal for other HNW), U.S. and international speculative-grade (high-yield) corporate bonds and floating-rate notes, emerging markets debt, and cash equivalents. Model strategies employing nontraditional hedge and private market investments will, naturally, carry those exposures as well. Each asset class carries a distinct set of risks, which should be reviewed and understood prior to investing.

Allocations

Each strategy is constructed with target weights for each asset class. Wilmington Trust periodically adjusts the target allocations and may shift away from the target allocations within certain ranges. Such tactical adjustments to allocations typically are considered on a monthly basis in response to market conditions. The asset classes and their current proxies are: large–cap U.S. stocks: Russell 1000® Index; small–cap U.S. stocks: Russell 2000® Index; developed international stocks: MSCI EAFE® (Net) Index; emerging markets stocks: MSCI Emerging Markets Index; U.S. inflation-linked bonds: Bloomberg/Barclays US Government ILB Index; international inflation-linked bonds: Bloomberg/Barclays World exUS ILB (Hedged) Index; commodity-related securities: Bloomberg Commodity Index; U.S. REITs: S&P US REIT Index; international REITs: Dow Jones Global exUS Select RESI Index; private markets: S&P Listed Private Equity Index; hedge funds: HFRI Fund of Funds Composite Index; U.S. taxable, investment-grade bonds: Bloomberg/Barclays U.S. Aggregate Index; U.S. high-yield corporate bonds: Bloomberg/Barclays U.S. Corporate High Yield Index; U.S. municipal, investment-grade bonds: S&P Municipal Bond Index; U.S. municipal high-yield bonds: Bloomberg/Barclays 60% High Yield Municipal Bond Index / 40% Municipal Bond Index; international taxable, investment-grade bonds: Bloomberg/Barclays Global Aggregate exUS; emerging bond markets: Bloomberg/Barclays EM USD Aggregate; and cash equivalents: 30-day U.S. Treasury bill rate.

LEARN MORE

Is your portfolio likely to fund your goals? Schedule a PARAGON® (Portfolio Analysis, Risk Assessment, and Goals Optimization) review, where sophisticated planning software infused with our insights tests how a portfolio may fare under challenging scenarios. To help you face the future with confidence, contact an advisor today.

CMF 2022 Form Handler