Heading into 2022, our Asset Mix Committee’s outlook was for continued economic growth, albeit at a slower pace than what was experienced in 2021. Notable headwinds were a more challenging corporate earnings environment, rising interest rates and continued supply chain disruptions. These headwinds were anticipated to create a more volatile stock market. The first quarter has highlighted that these risks remain. In addition, the Russian-Ukraine geopolitical conflict has caused additional uncertainty, while putting even more upward pressure on inflation.
Back in late 2020, the primary economic factors that we monitor closely suggested that the economic expansion was set to last from March 2020 until approximately mid-2024. This would represent a shorter economic expansion than the historical average of 7 years. These economic factors have progressed even more quickly, shortening our economic expansion outlook by 6 months.
Overall, we expect growth to continue its path of deceleration through the remainder of 2022. However, we do expect growth to reaccelerate heading into 2023. Over the next 18 months, financial conditions will continue to tighten as interest rates rise. This will begin to slow growth but in a delayed fashion.
Our Asset Mix Committee will be focused on risk management through the remainder of 2022 while ensuring our portfolio is positioned to capitalize on reacceleration in 2023. This means our fixed income allocation will remain at the lower end of its range, and equities at the higher end of its range. Within fixed income, the focus is to protect against inflation and rising interest rates. Within equities, we are focused on value-based sectors such as industrials and financials, as well as companies with the ability to flow price increases through to the consumer.
Given the tightening financial conditions, we are defensive on expensive sectors such as technology. The Matco balanced fund offers both asset class and equity exposure diversification. The fund is yielding 2.5% for unitholders, ensuring they are receiving income throughout their full investment horizon. In combination, this allows the fund to provide stable returns over the long term.