Asset Allocation for a Country and Economic Outlook

Explanation

Monetary and fiscal policies enacted by national governments influence the countries' aggregate economies, which, in turn, influence all industries and companies within the economies. Some examples are government spending's multiplier effect and the raising of firms' costs due to restrictive monetary policies. Taking a global perspective, the asset allocation for a country within a global portfolio will be affected by its economic outlook - countries approaching a recession will be underweighted, while optimistic economic outlooks would cause an investor to overweight the country.