Building an Asset Allocation Strategy That Balances Growth and Stability

Based on the current market environment and classic investment theories, I will provide you with a systematic asset allocation plan from four dimensions:

, , , and .

According to the latest market data and analysis, the current economic environment shows the following characteristics:

: The U.S. economy maintained resilience in 2025, with GDP growing at the fastest pace in two years in Q3. It is expected to maintain moderate growth of about 2% in 2026, and the market generally expects a “Goldilocks soft landing” scenario [1][2].

: Inflationary pressures have eased but remain above trend levels. The Federal Reserve is expected to gradually lower the benchmark interest rate to around 3% in 2026 [1]. This interest rate cut expectation is relatively favorable for bond assets.

: AI investment and data center construction are becoming the second engine of economic growth, with capital expenditure accelerating [1], which provides structural opportunities for technology-related assets.

Recent market data shows:

• S&P 500 Index rose 2.73% in the past 60 days with a volatility of 0.81% [0]
• Dow Jones Index performed relatively strongly, rising 4.03% [0]
• Sector rotation is obvious: Basic Materials (+0.47%) and Energy (+0.43%) led the gains, while Healthcare (-0.55%) lagged [0]

The market expects U.S. stock earnings growth to reach 14.4% in 2026 [1], but valuations are already at a high level and need to be treated with caution.

: Provide long-term capital appreciation and returns that outpace inflation

:

• Core Allocation
  (60% of stock position): Broad-based indices such as CSI 300 ETF and S&P 500 ETF to capture market average returns
• Satellite Allocation
  (40% of stock position): Structural opportunities in technology growth, healthcare, consumption upgrade, etc.
• Geographical Diversification
  : Allocate across multiple markets such as A-shares, U.S. stocks, and Hong Kong stocks to reduce single-market risk

:

• AI-related tech stocks benefit from the capital expenditure wave [1]
• High-quality companies with reasonable valuations and cash flow have defensive value
• Emerging market stocks may benefit from global capital reallocation [2]

: Reduce portfolio volatility, provide stable cash flow, and diversify risks

:

• Treasury Bonds
  (50% of bond position): 10-year Treasury Bond ETF, providing a risk-free return benchmark
• Investment-grade Credit Bonds
  (30% of bond position): Moderately enhance returns
• Convertible Bonds
  (20% of bond position): Balance bond floor safety and equity elasticity

:

• Interest rate cut expectations are favorable for bond prices [1]
• The correlation between bonds and stocks has decreased, enhancing diversification effects
• Pay attention to credit risk and prefer high-rated varieties

: Hedge inflation risk and respond to specific economic scenarios

:

• Gold
  (60% of commodity position): Anti-inflation and safe-haven properties, allocation ratio 10-15%
• Energy Commodities
  (25% of commodity position): Benefit from supply chain tensions and geopolitical risks
• Industrial Metals
  (15% of commodity position): Copper and other varieties benefit from infrastructure construction [1]

:

• Gold prices are at historical highs; the allocation ratio can be moderately reduced [2]
• Copper prices have seen the longest consecutive rise since 2017 [1], reflecting supply tightness expectations
• As a “phased tool”, commodities do not need to perform well throughout the year

: Provide liquidity, respond to emergencies, and seize opportunities to increase positions

:

• Money Market Fund
  (70% of cash position): On-exchange money market ETFs such as Yinhua Rili, with an annualized return of about 2%
• Short-term Wealth Management
  (30% of cash position): Bank T+0 wealth management products, balancing returns and liquidity
• Target Allocation Ratio
  : 5-10% of portfolio weight

:

• Provide the ability to increase positions during market corrections
• During the interest rate cut process, cash yields decline, but liquidity value rises
• In 2025, the scale of “Fixed Income+” funds hit a historical high of 2.42 trillion yuan [2], reflecting strong demand for stable allocation from funds

• 60% Stocks: Provide long-term growth momentum
• 40% Bonds: Stabilizer, reduce volatility
• Applicable Scenario
  : Relatively stable market trends, moderate risk preference of investors

• Do not allocate funds equally, but equalize risk contributions
• Usually need to significantly increase bond allocation ratio (achieved using leverage)
• Commodities and cash account for a considerable proportion to cope with inflation and deflation
• Applicable Scenario
  : Uncertain economic environment, pursuing stable returns

• High stock weight, allocate a large number of alternative investments (PE, VC, real estate, etc.)
• Assets with poor liquidity but high expected returns account for more than 50% [3]
• Applicable Scenario
  : Long-term funds, professional investors, pursuing excess returns

Bond Category: 50%
- 10-Year Treasury Bond ETF: 30%
- High-grade Credit Bond: 15%
- Convertible Bond:5%

Stock Category:30%
- Broad-based Index (CSI300/S&P500):20%
- Dividend Low Volatility ETF:10%

Commodity Category:10%
- Gold ETF:10%

Cash Category:10%
- Money Market Fund:10%

: Annualized 5-7%
:5-8%
: Near retirement, pursuing principal safety

Stock Category:50%
- Core Broad-based Index (CSI300 + S&P500):30%
- Growth Theme (Technology, Healthcare):12%
- Emerging Markets:5%
- Dividend Strategy:3%

Bond Category:35%
- Treasury Bond ETF:20%
- Credit Bond:10%
- Convertible Bond:5%

Commodity Category:10%
- Gold ETF:7%
- Energy/Industrial Metals:3%

Cash Category:5%
- Money Market Fund:5%

: Annualized7-9%
:10-12%
: Medium-to-long-term investors, pursuing stable growth

Stock Category:65%
- Core Broad-based Index:35%
- Technology Growth:15%
- Sub-sector Leaders:10%
- Global Allocation:5%

Bond Category:20%
- Treasury Bond + Credit Bond:15%
- Convertible Bond:5%

Commodity Category:10%
- Gold:5%
- Other Commodities:5%

Cash Category:5%

: Annualized9-12%
:15-20%
: Young investors, long-term funds, pursuing high returns

###1. Dynamic Adjustment Mechanism

• Low Stock Valuation
  (Shanghai Composite P/E Ratio <15x): Moderately overweight equity assets
• High Stock Valuation
  (Shanghai Composite P/E Ratio>30x): Reduce equity position, increase bonds and cash
• High Bond Yield
  : Increase allocation of long-duration bonds
• Low Bond Yield
  : Shorten duration, increase floating-rate varieties

• Recovery Period
  : Overweight stocks and commodities, standard allocation of bonds
• Overheating Period
  : Standard allocation of stocks and commodities, underweight bonds
• Stagflation Period
  : Overweight commodities and cash, underweight stocks and bonds
• Recession Period
  : Overweight bonds and cash, underweight stocks

###2. Regular Rebalancing

: Check the portfolio once a year [2]

:

• Trigger rebalancing when the proportion of an asset class deviates from the target allocation by more than 5 percentage points
• Achieve “buy low, sell high” by “selling part of the assets with large gains and buying underallocated assets”
• Rebalancing is essentially a
  disciplined investment strategy
  to avoid emotional decisions

###3. Long-Term Holding Principle

• Asset allocation strategy is designed for
  long-term (more than 5 years)
  [2]
• Short-term market fluctuations are inevitable; avoid frequent position adjustments
• Historical data shows that long-term holding can achieve better risk-adjusted returns

###4. Risk Management Measures

• Diversified Investment
  : Across asset classes, regions, and industries
• Risk Self-Assessment
  : Clarify risk tolerance and fund duration before investing [2]
• Dollar-Cost Averaging Strategy
  : For liquid assets, use regular fixed-amount investment to smooth costs
• Stop-Loss Discipline
  : Set stop-loss lines for high-risk assets

###1. Responding to the Risk of “U.S. Exceptionalism” Weakening

In 2025, the market observed the weakening of “U.S. Exceptionalism”, promoting a re-evaluation of the global geo-economy [2]. This means:

• Moderately reduce over-reliance on U.S. assets
• Increase allocation to other markets such as China and Europe
• Pay attention to the impact of geopolitical risks on commodities

###2. Seizing Structural Opportunities from AI Technology Revolution

AI-related investments have injected momentum into U.S. economic growth, and are expected to remain strong in 2026 [1]:

• Core Allocation: Tech Leader ETFs (e.g., Nasdaq 100)
• Satellite Allocation: Sub-sectors such as semiconductors and computing infrastructure
• Pay attention to valuation risks and avoid chasing high prices

###3. Coping with Complex Game Between Inflation and Interest Rates

Although inflation expectations have eased, vigilance is still needed:

• Moderately allocate inflation-protected bonds (TIPS)
• Keep physical assets such as gold as hedges
• Pay attention to the impact of real interest rate levels on asset prices

In a changing market environment, successful asset allocation requires:

1. Clarify the Responsibilities of Each Asset Class
   : Do not force each asset class to perform well in every stage, but let each asset perform its duties
2. Establish a Disciplined Framework
   : Overcome human weaknesses through principles such as regular rebalancing and long-term holding
3. Maintain Dynamic Adjustment Capability
   : Moderately adjust allocation ratios based on factors such as valuation levels and economic cycles
4. Adhere to the Principle of Diversification
   : Achieve risk diversification across multiple dimensions such as asset classes, regions, and industries
5. Match Personal Characteristics
   : Choose a suitable allocation plan based on risk tolerance, investment period, and fund nature

The core of asset allocation is not to predict the market, but to

, allowing stocks to be responsible for long-term growth, bonds to provide system stability, commodities to hedge specific risks, and cash to retain freedom of action, ultimately achieving long-term stable wealth appreciation.

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[0] Jinling API Data (Market Indices, Sector Performance, Technical Indicator Data)
[1] Bloomberg - “Copper Racks Up Longest Rally Since 2017 With Bulls at the Helm” (https://www.bloomberg.com/news/articles/2025-12-30/copper-racks-up-longest-rally-since-2017-with-bulls-at-the-helm)
[1] Seeking Alpha - “SPY: Market Expects 14.4% Earnings Growth In 2026, Can Double-Digit Return Continue?” (https://seekingalpha.com/article/4856244-spy-market-expects-14-4-percent-earnings-growth-in-2026-can-double-digit-return-continue)
[1] People’s Daily - “Is It Still Worth Buying U.S. Stocks in 2026?” (https://paper.people.com.cn/gjjrb/pc/content/202512/29/content_30127730.html)
[1] Manulife Investment - “2026 Global Macroeconomic Outlook” (https://caifuhao.eastmoney.com/news/20251225162035084543510)
[1] J.P. Morgan Private Bank - “Three Signs of Economic Rebound” (https://privatebank.jpmorgan.com/apac/cn/insights/markets-and-investing/tmt/shock-absorption-3-signs-the-economy-is-picking-up-from-here)
[2] Caifuhao - “Classic Asset Allocation Strategies” (https://caifuhao.eastmoney.com/news/20251225090956801561550)
[2] Caifuhao - “Investing in Fixed Income+ This Way May Provide a Better Experience” (https://caifuhao.eastmoney.com/news/20251223225045327719950)
[2] NetEase - “Farewell to 2025: A Review of Annual Hot Words in the Fund Circle” (https://www.163.com/dy/article/KHUDV2DP0519BKFH.html)
[3] Postal Savings Bank of China - “Brief Introduction to 3 Classic Asset Allocation Strategies” (https://www.psbc.com/cn/common/xfzqybhzl/jrzsxc/202209/t20220914_184735.html)
[3] Howbuy Fund - “Classic Asset Allocation Models at Home and Abroad, and China’s Asset Allocation Path” (https://www.howbuy.com/news/2023-11-29/5827798.html)