RM stocks’ hot streak may cool with the temperatures this fall. But investors who have benefitted from exposure to EM stocks this year don’t need to freeze them out of their portfolios. Rebalancing exposure back to a long-term target allocation may be the best approach.

So What?

The summer lull shouldn’t allow complacency to set in. We expect the U.S. bull market to continue, but risks remain and volatility is likely to pick up. But with a solid U.S. consumer, and modestly improving economic and earnings growth, we think the general equity trend will be higher. Although EM stocks have had solid summer gains, we caution investors against chasing returns and to rebalance as needed.

Liz Ann Sonders is senior vice president and chief investment strategist at Charles Schwab & Co.
 
Brad Sorensen is managing director of market and sector analysis at the Schwab Center for Financial Research.
 
Jeffrey Kleintop is senior vice president and chief global investment strategist at Charles Schwab & Co.
 
 
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