The WisdomTree Q2 2022 Asset Class and Risk Factor Review and Outlook

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We recently shared with you our Q2 Economic and Market outlook. In this blog post, we share our asset class and risk factor outlook.

Regular readers of WisdomTree blogs know that we are firm believers in both asset class and risk factor diversification when building our Model Portfolios. We believe this increases the potential for more consistent performance over full market cycles. This goes together with our belief in the power of compounding—if you don’t lose as much in down markets, you don’t have to win as much in up markets to still come out ahead in the long run.

Equity Asset Class Review and Outlook

Let’s begin with a quick Q1 review of asset class performances. Geographically, the U.S. outperformed the EAFE and emerging markets (“EM”) regions, at least partially due to a consistent strengthening of the dollar, but with respect to the EM, mostly due to the ongoing economic and market slump in China.

For definitions of the terms in the chart above, please visit the glossary.

Within the U.S., large caps continued to outperform small caps. We believe this may change as we move through the year.