Investing Essentials: Why equities continue to make sense today

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1. The Great Inflation refers to a period of high inflation that occurred in the United States from 1965 to 1982.

2. Penn Square Bank of Oklahoma City fails sending shockwaves through the U.S. banking system.

3. Long Term Capital Management (LTCM) collapses leading to a $3.7 billion bailout.

Satellite exposure

represents an actively managed portion of a portfolio in which a portfolio manager’s skill provides an opportunity to earn greater returns than the broad market benchmark, as opposed to the “core” portion of a portfolio which may be

passively managed. The

S&P 500 Index

is an unmanaged index that is widely regarded as the standard for measuring large-cap U.S. stock market performance. The

Consumer Price Index (CPI)

is a measure of the average change over time in the

prices paid by urban consumers for a market basket of consumer goods and services. The

National Bureau of Economic Research (NBER)

traditionally defines recession as a significant decline in economic activity that is spread across the economy and

that lasts more than a few months.

All investments are subject to market risk, including possible loss of principal. Diversification cannot assure a profit or protect against loss in a declining market. The information contained herein is general in nature and is provided solely for educational and

informational purposes. New York Life does not provide legal, accounting, or tax advice. You should obtain advice specific to your circumstances from your own legal, accounting, and tax advisors.

The Global Market Strategy team is a part of New York Life Investment Management LLC, an indirect wholly owned subsidiary of New York Life Insurance Company.

“New York Life Investments” is both a service mark, and the common trade name, of certain investment advisors affiliated with New York Life Insurance Company. Securities distributed by NYLIFE Distributors LLC, 30 Hudson Street, Jersey

City, NJ 07302, Member FINRA/SIPC.

5594237

MS18hh-02/25

•

Investing in equities can deliver enhanced long-term returns, but at the cost of higher risk. Investors

can tend to see higher risk-adjusted returns by diversifying their portfolio with a more dynamic

equity allocation and a less correlated asset class, such as fixed income, including core and

corporate bonds.

•

The sample portfolio (left) is the result of the New York Life Investments’ Global Market Strategy

team’s portfolio modeling and optimization analysis. Over a historical period (1973-2024),

this

hypothetical portfolio has tended to outperform the all-equity and traditional 60/40

portfolio over the long-term.

•

Within equities, investors should consider an overweight to

high dividend-yielding equity

with

additional exposure to large-cap equity (value and growth) and value equity (all-capitalizations).

Also, in the current market environment, we expect satellite exposure to

infrastructure equity

and/or

currency hedged international equity

could outperform the broader market.

•

Within bonds, diversifying core (income) bonds with

municipal

bond and

corporate

bond

exposure was found to raise risk-adjusted returns and reduce the average drawdown.

−

Given that the yield curve is normalizing, and we see more upside risk at the long end of the U.S.

Treasury curve, we think investors should consider reducing duration with satellite exposure to

short-duration high-yield bonds.

−

We also expect a sustained period of yield curve volatility. Accordingly, we believe

taxable

municipal bonds

may provide quality, long-dated duration with an attractive yield potential.

5%

Short-Duration

High-Yield Securities

5%

Infrastructure Equity

5%

Currency Hedged

International Equity

25%

Core Bonds

10%

Municipal

or Corporate Bonds

30%

High Dividend-

Yielding Equity

10%

Value Equity

10%

Large Cap Equity

New, rebalanced 60/40 portfolio

Consider a new, rebalanced 60/40 equity to fixed income portfolio

F

or illustrative purposes only

. T

here is no guarantee that any strategies discussed will be

effective

.