State Street Rebalance of Active ETF Models Hint at Caution

Macro conditions remain a bit of a mixed bag. In the past week alone, the latest read on inflation surprised to the downside, while unemployment figures beat estimates to the upside. And before the week is over, we get a read on consumer sentiment, which can go either way.

Trying to make sense of the latest data seems to always land us in the same debate over whether good news is actually bad news, or bad news is actually good news for markets.

It’s certainly a challenging time to be an investor, especially given the high levels U.S. equities are trading at. It's probably why a call for caution and diversification seems to be getting louder.

As an allocator or as an investor, what do you do? Do you keep betting on growth because it keeps delivering against all odds? Do you revisit style and size decisions going forward? Or do you look internationally and take on more duration at this point?

There’s no one-size-fits-all answer, but we can take some clues from what big asset managers are doing.