House View Q3 2026: Shock absorption​

Asset class convictions: fixed income

• In the current environment, where the distribution of possible scenarios is unusually wide, security selection increasingly outweighs beta as a driver of return.
• Yields have risen significantly in core rates markets, yet credit markets have not adjusted, revealing shocks are being absorbed differently across asset classes. Looking across regions and asset types, actively managing duration and focusing on higher‑quality credit can help smooth out volatility in stocks and interest rates.
• Emerging markets (EM) offer opportunities but demand a selective approach, such as favouring oil exporters over importers. We also like long 15-year Peruvian and 10-year Brazilian local rates.
• Early signs of a reflationary trend in China could make the renminbi one of the best diversifiers. Consider a structural long renminbi over the US dollar.
• In credit, we prefer financials and consumer non cyclicals with a tilt towards investment grade, and we are cautious on consumer cyclicals.
• Despite noise around private credit, overall credit fundamentals remain solid across public credit markets with low default rates. Any spread widening could be a buying opportunity.

Asset class convictions: multi asset

• We are optimistic on risk assets despite recent market volatility – and uncertainty around US data and the Fed’s interest rate path.
• Equities are our preferred asset class, supported by resilient AI-driven earnings. We maintain balanced regional exposure, with stronger convictions especially on emerging markets. We also rebalance from US tech into Asia. In Europe, we prefer Spain and small caps.
• In fixed income, we’re most constructive on steepeners and moderately positive on duration. We think interest rate cuts in Europe and the US will continue to support government bonds, except in Japan, where fiscal expansion and a hawkish BoJ could lead to even higher interest rates.
• Emerging market bonds remain a core conviction for their attractive carry and resilience and complement the highquality credit in our portfolios. Underlying fundamentals in the form of strong growth and improving fiscal positions should continue to drive performance.
• We maintain our long-term conviction on gold, underpinned by central bank demand and inflows into exchange-traded funds. We’ve upgraded our view on copper, with supply stagnating as demand grows to support infrastructure needed for the green transition and the AI boom.

The statements contained herein may include statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. We assume no obligation to update any forward-looking statement.

Private markets - mid-year outlook

• Resilience and return potential: Private markets are well positioned to deliver attractive risk-adjusted returns, supported by higher base rates, tighter bank regulation and wider spreads, which continue to create opportunities relative to public markets.
• Focus on fundamentals: Recent headlines have heightened scrutiny around valuations, redemptions and late-cycle risks, reinforcing a focus on fundamentals, greater transparency and more conservative structures.
• Diversification remains essential: Allocating across strategies, vintages, geographies and primary and secondary investments helps manage uncertainty, smooth deployment and avoid concentration risks.
• Rising importance of selectivity: Greater dispersion across assets and managers increases the need for robust underwriting, strong covenants and platforms with deep origination and workout expertise.
• Secondaries as a core allocation: In our view, LP- and GP-led secondaries provide access to seasoned portfolios, enhanced liquidity and potentially attractive entry points.
• Infrastructure driven by secular themes: Geopolitical volatility strengthens the case for energy security and independence, while digitalisation and decarbonisation drive demand, particularly in areas such as data centres, grids and storage.
• Private credit remains compelling: Its growing role in mid-market financing, alongside rising demand for infrastructure credit, direct lending across Europe and Asia, and low-correlation impact strategies, underpins continued growth.
• Private equity gradually recovering: Improving exit activity may support a recovery, while liquidity constraints continue to drive demand for secondaries.