As we look forward, we no longer believe in “not overthinking it.” Some of this year’s performance seems to have been based on an expectation of material change in economic and tax policy, very little of which we’ve seen occur. The next half-year will be decided by whether we actually see these things delivered — ratifying current market prices — or whether they happen in a more watered-down fashion than investors expect. If the latter is the case, the second half of the year could underperform the first half in terms of return.
Jeffrey L. Knight is global head of investment solutions and co-head of global asset allocation at Columbia Threadneedle Investments.