Asset Allocation for volatile times

While recent economic data point to better global growth, the European sovereign crisis is likely to flare up again in 2012. The third year of austerity is likely do depress European economies further. Help from Germany in the form of sound macroeconomic policies - such as higher inflation targeting, increased private spending - are unlikely due to deep seated but misplaced inflation fears. The Euro currency's survival is a matter of when not if.

Against this backdrop I remain overweight safe haven assets, primarily USD denominated, that have performed well in 2011 - such as long term U.S. Treasuries which returned 27% in 2011. Naturally, a portfolio should be diversified, containing both higher and lower beta asset classes. Hence, my personal allocation contains US and EM equities. I avoid, however, European debt and equities.

Exposure to the asset allocation below can easily and inexpensively gained through exchange traded funds  (ETF). TLO for long-term US government debt; N6M (Singapore traded) for Asian fixed income; VYM (US traded) or I17 (Singapore traded) for S&P 500 exposure, IAU (US) or O87 (Singapore).