Beyond the cliff: Our asset allocation for 2013

ASSET ALLOCATION

Tristan Hanson, head of asset allocation at Ashburton, explains how the group is positioned for key events in 2013.

At the last minute, the US Congress agreed a deal to avoid the worst of the fiscal cliff tax hikes, scheduled to take effect at the start of 2013. In a compromise outcome, scheduled income tax rate increases (expiration of the Bush tax cuts) have been avoided for those earning less than $400k (ie the majority). However, the expiration of other tax cuts (eg payroll taxes rise from 4.2% to 6.2%) means a material fiscal tightening will occur in the US this year (perhaps to the tune of 1.5% of GDP). Decisions over spending cuts have been delayed by two months and the US debt ceiling limit...