Opportunities on the Horizon: Investing Through a Slowing Economy

Overview | WEALTH OUTLOOK 2023 | MID-YEAR EDITION | 19 1.3 The value of strategic asset allocation: Mitigating portfolio risk during times of investor stress 1 Adaptive Valuation Strategies (AVS) is Citi Global Wealth Investments’ proprietary strategic asset allocationmethodology. It determines the suitable long–termmix of assets for each client’s investment portfolio. The AVS portfolio used in the analysis is the Global USD Traditional Only risk level 3 portfolio. Risk levels are an indication of clients’ appetite for risk. An AVS L3 - Seeks modest capital appreciation and, secondly, capital preservation. The level 3 Diversification does not guarantee a profit or ensure against a loss of principal. DAVIDE ANDALORO Senior Portfolio Manager and Head of Multi Asset Strategy, Citi Investment Management PAISAN LIMRATANAMONGKOL Global Head of Global Asset Allocation and Quantitative Research, Citi Investment Management XINHE Investment Quantitative Research Senior Lead, Citi Investment Management During times of acutemarket stress, a disciplined strategic asset allocation may lead to higher risk-adjusted long-term returns bymitigating drawdowns and volatility. Given 2022’smarket downturn, the high valuation for the US dollar and the likely growth the global economymay experience after recessionary conditions end in the US, our strategic asset allocation framework, Adaptive Valuation Strategies 1 , now forecasts higher risk-adjusted returns over the long-term. Using strategic asset allocation (SAA) to diversify among different asset classes may improve investment outcomes Citi’s proprietary SAA methodology, Adaptive Valuation Strategies (AVS), can help reduce volatility risk in a portfolio A long-term focus, disciplined investment framework and patience are hallmarks of a sound SAA strategy