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Behind the Numbers, with Sam Stovall

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“Our investment policy committee has a benchmark for the average balance investor of 60% of their money exposed to equities and 40% exposed to fixed income,” says Sam Stovall, S&P’s chief economic strategist. “This is because over the past 35 years, that allocation has provided the best risk-adjusted returns for a long-term oriented investor,” he notes. Within that 60% exposed to equities, the committee’s benchmark is set at 45% U.S. and 15% international, however Stovall says the committee recommends 40% U.S. and 20% international at the present time. “We have boosted international for two reasons,” he explains. “We believe that the U.S. economy is further along later in its economic cycle, so growth could be a bit more challenging in the U.S. than overseas. Second, with slow growth in the U.S., we think that the U.S. dollar will weaken against foreign currency.”