The first quarter of 2015 ended with the US stock market almost unchanged. Investors have been anticipating what the Federal Reserve is likely to say in its next few meetings so as to gauge when the next interest rate hike is. US Treasury bonds also ended almost unchanged, albeit slightly lower than where they started in 2015, due to increased anticipation of the next interest rate hike. Internationally, emerging market stocks were under pressure due to a strong US dollar while in developed markets, in Europe specifically, stocks have benefited from central bank stimulus measures and have had a nice run up in the first quarter of 2015.

Given the uncertainty surrounding the near-term actions of the Federal Reserve we think market risk is likely to increase over the next six months. Our current live allocation models take this into account with a slight bent towards slightly lowering risk in each respective model portfolio compared to baseline weights.