The Global Investment Committee (GIC) is a group of seasoned investment professionals from Morgan Stanley & Co. LLC, Morgan Stanley Investment Management, and Morgan Stanley Wealth Management who meet regularly to discuss the global economy and markets. The committee determines the investment outlook that guides our advice to clients. They continually monitor developing economic and market conditions, review tactical outlooks and recommend asset allocation model weightings, as well as produce a suite of strategy, analysis, commentary, portfolio positioning suggestions and other reports and broadcasts.
For index, indicator and survey deﬁnitions referenced in this report please visit the following: https://www.morganstanley.com/wealth- investmentsolutions/wmir-deﬁnitions
General: Hypothetical performance should not be considered a guarantee of future performance or a guarantee of achieving overall ﬁnancial objectives. Asset allocation and diversiﬁcation do not assure a proﬁt or protect against loss in declining ﬁnancial markets.
Hypothetical performance results have inherent limitations. The performance shown here is simulated performance not investment results from an actual portfolio or actual trading. There can be large differences between hypothetical and actual performance results.
Despite the limitations of hypothetical performance, these hypothetical performance results may allow clients and Financial Advisors to obtain a sense of the risk / return trade-off of different asset allocation constructs.
Investing in the market entails the risk of market volatility. The value of all types of securities may increase or decrease over varying time periods.
This analysis does not purport to recommend or implement an investment strategy. Financial forecasts, rates of return, risk, inﬂation, and other assumptions may be used as the basis for illustrations in this analysis. They should not be considered a guarantee of future performance or a guarantee of achieving overall ﬁnancial objectives. No analysis has the ability to accurately predict the future, eliminate risk or guarantee investment results. As investment returns, inﬂation, taxes, and other economic conditions vary from the assumptions used in this analysis, your actual results will vary (perhaps signiﬁcantly) from those presented in this analysis.
The assumed return rates in this analysis are not reﬂective of any speciﬁc investment and do not include any fees or expenses that may be incurred by investing in speciﬁc products. The actual returns of a speciﬁc investment may be more or less than the returns used in this analysis. The return assumptions are based on hypothetical rates of return of securities indices, which serve as proxies for the asset classes. Moreover, different forecasts may choose different indices as a proxy for the same asset class, thus inﬂuencing the return of the asset class.
Asset Class Risk Considerations
Equity securities may ﬂuctuate in response to news on companies, industries, market conditions and general economic environment.
Investing in foreign markets entails risks not typically associated with domestic markets, such as currency ﬂuctuations and controls, restrictions on foreign investments, less governmental supervision and regulation, and the potential for political instability. These risks may be magniﬁed in countries with emerging markets and frontier markets, since these countries may have relatively unstable governments and less established markets and economies.
Investing in currency involves additional special risks such as credit, interest rate ﬂuctuations, derivative investment risk, and domestic and foreign inﬂation rates, which can be volatile and may be less liquid than other securities and more sensitive to the effect of varied economic conditions. In addition, international investing entails greater risk, as well as greater potential rewards compared to U.S. investing. These risks include political and economic uncertainties of foreign countries as well as the risk of currency ﬂuctuations. These risks are magniﬁed in countries with emerging markets, since these countries may have relatively unstable governments and less established markets and economies.
Investing in small- to medium-sized companies entails special risks, such as limited product lines, markets and ﬁnancial resources, and greater volatility than securities of larger, more established companies.
The value of ﬁxed income securities will ﬂuctuate and, upon a sale, may be worth more or less than their original cost or maturity value. Bonds are subject to interest rate risk, call risk, reinvestment risk, liquidity risk, and credit risk of the issuer.
High yield bonds (bonds rated below investment grade) may have speculative characteristics and present signiﬁcant risks beyond those of other securities, including greater credit risk, price volatility, and limited liquidity in the secondary market. High yield bonds should comprise only a limited portion of a balanced portfolio.
Companies paying dividends can reduce or cut payouts at any time.
Asset allocation and diversiﬁcation do not assure a proﬁt or protect against loss in declining ﬁnancial markets.
Any type of continuous or periodic investment plan does not assure a proﬁt and does not protect against loss in declining markets. Since such a plan involves continuous investment in securities regardless of ﬂuctuating price levels of such securities, the investor should consider his ﬁnancial ability to continue his purchases through periods of low price levels.
Growth investing does not guarantee a proﬁt or eliminate risk. The stocks of these companies can have relatively high valuations. Because of these high valuations, an investment in a growth stock can be more risky than an investment in a company with more modest growth expectations.
Value investing does not guarantee a proﬁt or eliminate risk. Not all companies whose stocks are considered to be value stocks are able to turn their business around or successfully employ corrective strategies which would result in stock prices that do not rise as initially expected.
Because of their narrow focus, sector investments tend to be more volatile than investments that diversify across many sectors and companies. Technology stocks may be especially volatile. Risks applicable to companies in the energy and natural resources sectors include commodity pricing risk, supply and demand risk, depletion risk and exploration risk. Health care sector stocks are subject to government regulation, as well as government approval of products and services, which can significantly impact price and availability, and which can also be significantly affected by rapid obsolescence and patent expirations.
Rebalancing does not protect against a loss in declining ﬁnancial markets. There may be a potential tax implication with a rebalancing strategy. Investors should consult with their tax advisor before implementing such a strategy.
The indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes only and do not represent the performance of any speciﬁc investment.
The indices selected by Morgan Stanley Wealth Management to measure performance are representative of broad asset classes. Morgan Stanley Wealth Management retains the right to change representative indices at any time.
Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States. This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security or other ﬁnancial instrument or to participate in any trading strategy. Past performance is not necessarily a guide to future performance.
The securities/instruments discussed in this material may not be appropriate for all investors. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Morgan Stanley Wealth Management recommends that investors independently evaluate speciﬁc investments and strategies, and encourages investors to seek the advice of a ﬁnancial advisor.
This material is based on public information as of the speciﬁed date, and may be stale thereafter. We have no obligation to tell you when information herein may change. We and our third-party data providers make no representation or warranty with respect to the accuracy or completeness of this material. Past performance is no guarantee of future results.
This material should not be viewed as advice or recommendations with respect to asset allocation or any particular investment. This information is not intended to, and should not, form a primary basis for any investment decisions that you may make. Morgan Stanley Wealth Management is not acting as a ﬁduciary under either the Employee Retirement Income Security Act of 1974, as amended or under section 4975 of the Internal Revenue Code of 1986 as amended in providing this material except as otherwise provided in writing by Morgan Stanley and/or as described at www.morganstanley.com/disclosures/dol.
Morgan Stanley Smith Barney LLC, its affiliates and Morgan Stanley Financial Advisors do not provide legal or tax advice. Each client should always consult his/her personal tax and/or legal advisor for information concerning his/her individual situation and to learn about any potential tax or other implications that may result from acting on a particular recommendation.
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