WEBVTT

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The first half

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of 2025 has seen rapid
and often unpredictable

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policy changes, which have left
many investors feeling uncertain.

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We believe these uncertainties

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will be in play for the next few months,
if not longer.

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Even if countries negotiate lower tariffs
with the US, the tariffs that remain

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should still produce a spike in inflation
and then an economic slowdown.

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But we think the U.S.

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economy will avoid a recession
with a cushion

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from Federal Reserve interest-rate
cuts, tax relief, and deregulation.

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In fact, we're looking for these positives
to help fuel a mild economic recovery

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towards the end of 2025 and into 2026.

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The prospect of a slowdown, followed
by a recovery presents an opportunity

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for long-term investors to consider
increasing positions in high quality U.S.

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asset classes and sectors,
specifically U.S.

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large- and mid-cap equities.

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We view companies with historically strong
balance sheets, good cash flow,

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low debt, and long-term growth prospects
as well equipped to confront

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the economic impact of tariffs.

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Investors also may want to position
long-term portfolios for future

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economic expansion potential.

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At the sector level, we believe investors
should consider increasing exposure

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to the Information Technology,
Communication Services, Financials, Energy,

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and Utilities sectors.
We prefer building exposure incrementally

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if market drawdowns
create buying opportunities as we expect.

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Quality is also our theme in fixed income.

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We recommend investors

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be selective and focus on investment-
grade corporate bonds and municipal bonds.

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We favor maturities of 3 to 7 years,
an intermediate range

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because we expect similar yields,
but much less price and yield volatility

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than from longer-dated maturities.
In real assets,

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we favor a broad allocation of commodities
that gives exposure to precious metals

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during times of policy stress,
but also adds energy and industrial

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commodities to prepare
for the economic recovery we expect.

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Finally, for qualified investors,
we believe adding alternative strategies

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to a portfolio of stocks and bonds
may help build a more resilient portfolio

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better able
to withstand periods of market volatility.

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For more of our insights and guidance
for the rest of the year and beyond,

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read our special report 2025 Midyear
Outlook: Opportunities amid uneven terrain.