Asset Allocation Update: Staying Invested, But More Selective
- Daniel Tittil
- Apr 24
- 5 min read
When I published my earlier market updates this year, the core message was fairly simple: the global economy was still on reasonably solid footing, earnings were holding up, and investors did not need to panic out of risk assets.
That broad view still holds.
But the environment has become more complicated.
The issue is not that the cycle has broken. It is that the path forward has become less smooth, less predictable, and more sensitive to shocks, particularly through the energy channel. Geopolitical tensions have reintroduced energy as a major macro variable, and that matters because energy does not stay in its own lane. It affects inflation, central bank expectations, business costs, sentiment, and ultimately how markets price risk.
So while I do not believe this is an environment that calls for abandoning growth assets, I do believe it calls for a more selective and risk-aware approach to portfolio construction.
The cycle is intact, but the margin for error is smaller
One of the most important things investors can do is distinguish between a genuine deterioration in the underlying cycle and a change in the risk environment.
Right now, I view this as the latter.
Growth has not collapsed. Corporate earnings have not fallen apart. Financial conditions, while evolving, are still broadly supportive. The global economy entered this phase from a position of relative strength. That matters.
What has changed is that the range of outcomes has widened.
Higher oil prices and supply route disruption have introduced more inflation uncertainty.
That, in turn, makes the rate path less predictable. Instead of a relatively smooth glide toward lower rates, central banks may need to remain restrictive for longer if energy-driven inflation proves sticky. Markets have started to reflect that reality with more bursts of volatility and less straightforward leadership.
This is not a reason to become emotional. It is a reason to become more disciplined.
What I changed in the allocation framework
In this environment, my response has not been to exit risk assets outright. It has been to refine how risk is being taken.
At the portfolio level, that meant a tactical reduction in equity exposure across balanced and growth mandates, with more capital moving toward fixed income and selected alternatives.
More specifically, I reduced equity exposure by roughly 5 to 6 percentage points in the affected mandates. Fixed income was increased by about 3 percentage points, while alternative allocations were largely maintained, with only modest changes at the higher-risk end. Within equities, I reduced exposure to Europe and emerging markets, while maintaining U.S. exposure. Within portfolio construction more broadly, I continued leaning toward quality, income generation, and structured exposures that can improve resilience without forcing clients into an all-or-nothing posture.
That distinction matters.
This is not a bearish call in the traditional sense. It is a portfolio construction decision. The goal is to remain invested in a still-constructive cycle, but with a framework that is better able to handle volatility, inflation uncertainty, and wider dispersion across sectors and regions.
Why I reduced some equity exposure
When markets become less forgiving, broad exposure becomes less attractive relative to selective exposure.
There are times when simply owning “the market” is enough. This is not one of those times.
Valuation dispersion matters more now. Policy sensitivity matters more now. Energy exposure matters more now. Currency vulnerability matters more now. In that kind of environment, I would rather be deliberate.
That is why I became less enthusiastic about certain non-U.S. exposures, particularly where economies and markets are more sensitive to external financing conditions, energy shocks, or weaker underlying flexibility. At the same time, I still see strong structural support for U.S. exposure through artificial intelligence, productivity-enhancing technology, infrastructure, and the simple reality that many of the highest-quality large-cap businesses remain U.S.-based.
So this is not about becoming negative on equities as an asset class.
It is about recognizing that not all equity exposure is equal.
Why fixed income matters more again
For years, many investors got used to thinking of fixed income as dead money.
That is no longer the case.
In a world where uncertainty has increased and policy direction is less straightforward, high-quality fixed income can once again play a meaningful role. It can generate real income, help stabilize portfolios, and reduce dependence on equity beta alone.
That said, this does not mean blindly extending duration or taking excessive credit risk. It means being selective. It means recognizing that fixed income is useful again, but still requires thought.
That is why my emphasis remains on quality.
Why alternatives still matter
Alternatives are not there to make a portfolio look sophisticated. They are there to improve portfolio behavior.
That is especially relevant now.
When the market backdrop becomes more uneven, alternatives can help bridge the gap between return-seeking and risk management. In my framework, that includes areas like structured strategies, private credit, infrastructure, real assets, and selective commodity exposure depending on the mandate and portfolio size.
The reason I continue to value structured exposures in particular is that they can allow investors to monetize uncertainty rather than simply react to it. In the right context, they can improve income generation and define downside more clearly than outright equity exposure.
Used properly, alternatives are not a replacement for discipline. They are an extension of it.
This is really about process
The most dangerous thing investors can do in a market like this is swing between extremes.
One week they want maximum offense because markets feel resilient. The next week they want to hide in cash because headlines feel scary. That is not portfolio management. That is emotional reaction dressed up as strategy.
A proper asset allocation framework should help you avoid that trap.
It should give you a structured way to respond to changing conditions without losing the thread of the bigger picture. It should help you adjust risk, not abandon the plan. It should connect your portfolio to the rest of your financial life, your cash flow needs, your time horizon, your tax considerations, your family goals, your business interests, and your ability to withstand volatility without making destructive decisions.
That is how I think about this work.
Not as isolated market calls, but as part of a broader process of building investment portfolios that fit into a structured financial life.
Final thought
The current market environment is more complex than it looked earlier in the year. But complexity is not the same as collapse.
The cycle still has support. Earnings are still resilient. Opportunities still exist.
What has changed is that selectivity matters more, discipline matters more, and portfolio construction matters more.
That is why I refined the allocation framework the way I did.
Not to retreat, but to position more intelligently.
Ready to bring more structure to your portfolio?
If you are looking at your own portfolio and wondering whether your current allocation still makes sense in this environment, that is a worthwhile conversation to have.
My work is generally best suited to investors who want more than product ideas or one-off opinions. It is for people who want a structured investment framework that fits into a broader financial life.
My portfolio management services typically start at USD 100,000 or TTD 500,000. For those who want to explore whether there is a fit, the best starting point is a short Discovery Meeting, which I use to understand your current financial setup, identify gaps or inefficiencies, and discuss what a more structured approach could look like.
You can book a Discovery Meeting here:
-Daniel Tittil, CFA, CAIA, MSc.
Lead Advisor at WealthwithDaniel.com
Chief Investment Officer at Legacy Wealth Management (Cayman) Ltd.
Portfolio & Wealth Manager, Director at Admiral Capital
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