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"Confluence expects near-trend US GDP growth and no recession over the next three years, leading them to favor domestic large caps and intermediate-maturity fixed income while holding gold to hedge geopolitical risks."
In its Fourth Quarter 2025 report, Confluence Asset Allocation outlines a constructive economic outlook, forecasting near-trend GDP growth and no recession over its three-year horizon. Growth is increasingly propelled by business capital expenditures, especially within technology and AI. Confluence has increased equity exposure in domestic large caps at the expense of mid caps, citing the benefits of passive flows and lower recession risks, while remaining completely void of small-cap equities due to tariff and financing headwinds. Within fixed income, allocations shifted toward intermediate-maturity Treasurys and seasoned mortgage-backed securities (MBS) as the yield curve normalizes. Gold is maintained across all strategies as a hedge against geopolitical volatility and US dollar weakness.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High-conviction positioning: Confluence expects near-trend US GDP growth and no recession over the next three years, leading them to favor domestic large caps and intermediate-maturity fixed income while holdi...
Growth Outlook
Market outlook remains above average conviction: Confluence expects near-trend US GDP growth and no recession over the next three years, leading them to favor domestic large caps and intermediate-maturity fixed income while holdi...
Risk Appetite
Risk appetite posture is above average conviction: Confluence expects near-trend US GDP growth and no recession over the next three years, leading them to favor domestic large caps and intermediate-maturity fixed income while holdi...
Capital Deployment
Manager actively deployed capital into high-conviction opportunities. Confluence expects near-trend US GDP growth and no recession over the next three years, leading them to favor domestic large caps and intermediate-maturity fixed income while holdi...
Forward Guidance
Forward guidance signal: Confluence expects near-trend US GDP growth and no recession over the next three years, leading them to favor domestic large caps and intermediate-maturity fixed income while holdi...
Language Signal
Tone analysis indicates above average conviction language: Confluence expects near-trend US GDP growth and no recession over the next three years, leading them to favor domestic large caps and intermediate-maturity fixed income while holdi...
Perceived Risk
Perceived risk level is evaluated as moderate conviction. Confluence expects near-trend US GDP growth and no recession over the next three years, leading them to favor domestic large caps and intermediate-maturity fixed income while holdi...
Opportunity Density
Opportunity density index indicates above average conviction actionable entry points. Confluence expects near-trend US GDP growth and no recession over the next three years, leading them to favor domestic large caps and intermediate-maturity fixed income while holdi...
Time Horizon
Investment time horizon reflects a high conviction orientation. Confluence expects near-trend US GDP growth and no recession over the next three years, leading them to favor domestic large caps and intermediate-maturity fixed income while holdi...
