In this volatile environment, I continue to advocate trimming exposure to:
1.) Parts of the equity market with stretched valuations, including US small-cap and consumer discretionary stocks.
2.) Assets vulnerable to rising real interest rates, including long-dated Treasuries, TIPS and equities that are considered bond market proxies such as utility sector stocks.
And as for my forecast for Fed tapering, I see the Fed beginning to gradually wind down the pace of its asset purchase program this fall.
Russ Koesterich, CFA, is the iShares Global Chief Investment Strategist.