Equities are priced to perfection, yet we remain constructive but cautious, while staying upbeat on gold, where we have raised our conviction rating to 5/5.
Key investment themes
- Our equity strategy focusses on the technology sector, maintaining positions in both the US and China.
- Gold continues to offer a reliable hedge against political risks and a depreciating dollar.
- US utilities provide a defensive gateway to the artificial intelligence theme.
- Returns in fixed income show investment grade, high yield and AT1s running ahead of the carry offered at the start of the year.
Equity markets are priced to perfection
After a resilient September, our portfolio positioning continues to reflect a constructive outlook. We remain aligned with our central scenario of a resilient macroeconomic environment, confident that both monetary policy and fiscal supports will remain steady in the coming months, while interest rate risks are receding.
However, markets have already priced in the bulk of the good news, meaning vigilance is the watchword. The current ‘near-perfect’ situation implied by valuations leaves equities vulnerable to any upsets. With that in mind, we do not see equities as being in bubble territory, as their valuations are not as overstretched as they were in the early 2000s. We maintain our preference for US equities, with – unsurprisingly – a focus on the technology sector, as it is supported by robust earnings growth.
What is more, the secular rise of artificial intelligence (AI) is fuelling demand for energy-intensive data centres, which will require substantial power resources in the years ahead. Given the length of time needed to build and connect new capacity, we expect the deployment of multiple new energy sources to speed up. Securing power will be a central challenge, while surging demand is set to benefit not only utilities but also companies well placed to capture the next investment cycle.
Read our October House View for more insights.
The opinions expressed herein are correct as at 6 October 2025 and are subject to change without notice. Any forecast, projection or target, where provided, is indicative only and is not guaranteed in any way.