United States
US equities combine strong earnings momentum with demanding valuations. Mega-cap artificial intelligence beneficiaries continue to lead growth, leaving market leadership concentrated. The S&P 500 trades at approximately 19 times forward earnings, close to its ten-year average but still elevated relative to longer-term history.
What this means for investors: We remain Neutral. US equities retain an important long-term role, but portfolios should diversify beyond the largest technology names and favour businesses with durable cash generation.
Japan
Japan is undergoing a structural transition as inflation normalises and the Bank of Japan raises interest rates. Banks, semiconductor companies and corporate buybacks remain supportive, but the market is no longer clearly cheap. The complementary deposit rate rose to 1.25% on 24 September 2026. Meanwhile, a weaker yen supports exporters but can reduce returns for unhedged foreign investors.
What this means for investors: We have moved Japan from Overweight to Neutral. The trend remains constructive, but valuation and currency risk no longer justify an above-benchmark allocation.
Asia ex-Japan and Emerging Markets
Asia ex-Japan has the portfolio’s strongest equity trend, led by the artificial-intelligence and semiconductor cycle in Korea and Taiwan. Earnings growth is strong but narrow, index concentration is high and regional revisions remain mixed.
Emerging-market equities share these strengths and risks. Momentum is positive, but outcomes remain sensitive to Chinese demand, Asian monetary policy and the US dollar.
What this means for investors: We hold both regions at Neutral. Momentum supports participation, but concentrated leadership and uneven fundamentals require careful position sizing.
United Kingdom and Europe
The UK is among the cheapest developed equity markets in our universe and offers income and defensive global exposure through energy, resources, financials and healthcare. Europe ex-UK presents a less compelling balance: bank-led earnings are recovering, but weak growth and tighter policy constrain the broader market.
What this means for investors: We remain Neutral in both regions. The UK offers value and income, while Europe provides diversification, but neither has sufficient breadth or policy support for a conviction Overweight.
Commodities: The Conviction Overweight
Commodities are our sole Overweight. Constrained supply, positive momentum and China’s return to modest manufacturing expansion support the allocation, although weak domestic demand keeps the recovery uneven. Selected parts of the basket may also earn positive roll yield but carry varies across commodities and over time.
Within our investment process, agriculture and base metals currently rank more favourably than gold or oil. A renewed geopolitical disruption to energy supply would add a defensive benefit, but the core case does not depend on that outcome.
What this means for investors: Measured commodity exposure can diversify persistent inflation risk that is difficult to hedge elsewhere in a traditional portfolio.
