Now’s the time to plan your legacy

Δ Overweight ∇ Underweight — Neutral

Equity – at a glance    Δ

26 SEPTEMBER 2025

• We remain Overweight global equities. We upgrade US equities to Overweight on sustained earnings momentum from AI-related investments and accommodative monetary policy, which can help the US economy glide to a soft landing. Any near-term consolidation, driven by elevated valuations and seasonality, would present attractive opportunities.
  
• We retain an Overweight allocation on Asia ex-Japan (AxJ) equities, given US tariff risk is in the price. We are Overweight China equities within the region, with key catalysts being fiscal support and domestic AI development. Indian equities are a core holding, with the recent simplification in regulations – effectively a goods and services tax cut – lending tailwind to growth.
  
• We have a Neutral allocation to Japan equities, underpinned by continual improvements in corporate governance, though uncertainties arising from the upcoming Liberal Democratic Party leadership election is a near-term risk.
  
• We downgrade Europe ex-UK to an Underweight allocation due to heightened political and fiscal uncertainties. UK equities also remain an Underweight allocation, given the market’s low exposure to growth sectors.
  

North America equities – Core holding     Δ

26 SEPTEMBER 2025

The Bullish Case:

+ Earnings growth

+ AI uptrend

The Bearish Case:

– Valuations

– US trade policy uncertainty

Europe ex-UK equities – Core holding     ∇

26 SEPTEMBER 2025

The Bullish Case:

+ Inexpensive valuations

+ German fiscal spending

The Bearish Case:

– US trade policy risks

UK equities – Less Preferred holding     ∇

26 SEPTEMBER 2025

The Bullish Case:

+ Attractive valuations

+ dividend yield

The Bearish Case:

– Stagflation risks

– US trade policy risks

Japan Equities – Core holding     —

26 SEPTEMBER 2025

The Bullish Case:

+ Reasonable valuations

+ rising dividends/share buybacks

The Bearish Case:

– JPY strength

– US trade policy

Asia ex-Japan equities – Preferred holding     Δ

26 SEPTEMBER 2025

The Bullish Case:

+ Earnings

+ India growth

+ China policy support

The Bearish Case:

– China growth concerns

– US trade policy

Δ Overweight     ∇ Underweight    — Neutral

Bonds – at a glance     —

26 SEPTEMBER 2025

• Global bonds remain a core allocation in our foundation portfolios. We expect short-term yields to decline more than long-term yields: our 12-month target for the Fed Funds rate is 3.25%, while we expect the US 10-year government bond yield to range between 3.75% and 4%. Concerns about US fiscal policy, tariffs and Fed independence will keep rates volatility high. However, we would view any jump in long-term yields as transitory and as an opportunity to lock in still-high absolute yields. Bonds with 5-7-year maturities offer the most attractive balance between attractive yields and fiscal and inflation risks.
  
• We maintain an Overweight in EM local currency (LCY) government bonds, driven by a benign local inflation and rate cut outlook, improvement in fiscal positions and our expectation of a weak USD. We raise Developed Market Investment Grade (DM IG) corporate bonds to Neutral, while downgrading DM HY bonds to Underweight. Longer-maturity IG bonds should outperform HY peers in our base scenario of short-term yields falling more than long-term yields (a ‘bull steepening’ scenario). Opportunistic ideas: We remain bullish on UK government bonds (FX-unhedged), US Treasury Inflation-Protected Securities (TIPS) and short-duration US HY bonds.
  

Developed Market Investment Grade government bonds – Core holding     —

26 SEPTEMBER 2025

The Bullish Case:

+ High credit quality

+ Attractive yields

The Bearish Case:

– High sensitivity to inflation

– Monetary policy

Developed Market Investment Grade corporate bonds – Less Preferred holding     —

26 SEPTEMBER 2025

The Bullish Case:

+ High credit quality

+ sensitive to falling yields

The Bearish Case:

– Elevated valuations

Developed Market High Yield corporate bonds – Core holding     ∇

26 SEPTEMBER 2025

+ Attractive yield

+ Low rate sensitivity

The Bearish Case:

– Elevated valuations

– Sensitive to growth

Emerging Market USD government bonds – Core holding     —

26 SEPTEMBER 2025

The Bullish Case:

+ Attractive yield

+ Sensitive to US rates

The Bearish Case:

– EM credit quality

– US trade policy risks

Emerging Market Local currency government bonds – Preferred holding     Δ

26 SEPTEMBER 2025

+ Attractive yield

+ central bank rate cuts

+ Benefit from USD weakness

The Bearish Case:

– US trade policy risks

Asia USD bonds – Core holding   —

26 SEPTEMBER 2025

The Bullish Case:

+ Moderate yield

+ Low volatility

The Bearish Case:

– Sensitive to China growth

Δ Overweight     ∇ Underweight    — Neutral

Commodities – at a glance

26 SEPTEMBER 2025

• We raise our 3- and 12-month gold price targets to USD 3,850/oz and USD 4,100/oz, respectively.
  
• We expect West Texas Intermediate (WTI) oil to remain in a range around USD 65/bbl. We continue to expect excess supply to be the dominant factor. This should cap temporary rebounds in prices due to potential geopolitical risks.
  

Oil

26 SEPTEMBER 2025

Gold      Δ

26 SEPTEMBER 2025

The Bullish Case:

+ Portfolio hedge

+ Central bank demand

+ Falling real yields

The Bearish Case:

– Resilient USD

Δ Overweight     ∇ Underweight    — Neutral

Alternatives – at a glance     —

26 SEPTEMBER 2025

The Bullish Case:

+ Diversifier characteristics

The Bearish Case:

– Equity, corporate bond volatility

Δ Overweight     ∇ Underweight    — Neutral

Multi-Asset – at a glance

26 SEPTEMBER 2025

Our multi-asset income (MAI) strategy has remained resilient amid all the noise and turbulence in Q2 25, delivering 2.1% over the past 3 months, with solid performances from dividend-paying equities, High Yield (HY) bonds, Emerging Market (EM) Local Currency (LCY) bonds and sub-financials.

Our MAI strategy continues to deliver a steady yield of c. 5.7%, which remains attractive in the current rate environment. Over the next 6-12 months, we expect the Fed to resume interest rate cuts. Investors should look to lock in higher income, capitalising on yield spikes to benefit from attractive income and potential capital gains.

Under our base case of a US economic soft landing, we continue to see further upside in equities and thus remain comfortable in tilting slightly in favour of equities over fixed income. Our equity allocations are balanced between income-generating equities and traditional growth equities. Within fixed income, our expectation of a weaker USD supports our case for increased allocations into EM LCY bonds. Lastly, we expect US Agency Mortgage-Backed Securities (MBS) to continue to outperform Developed Market (DM) Investment Grade (IG) government bonds.