A time to diversify - Transcript

Global equity markets have displayed rather impressive momentum this year, with major US indices achieving record highs.

Thus far, global equities have climbed nearly 20%, buoyed by economic performance that has exceeded expectations and a robust showing from corporate earnings.

This upward trajectory has been further underpinned by fiscal dominance and a growing appetite for real assets, which has bolstered investor confidence.

That said, it’s not entirely smooth sailing.

Lingering uncertainty around US trade policy continues to cast a shadow over the outlook for corporate profit growth as we approach 2026.

Over the past month, President Donald Trump has either imposed or threatened tariffs on exports from key trading partners, including China and Canada.

Moreover, there are emerging signs of market exuberance in certain sectors.

Elevated earnings expectations and speculative investment patterns in the technology sector, in particular, evoke memories of the late 1990s tech bubble.

In light of these dynamics, we believe this is a particularly prudent moment to prioritise diversification.

Taking a strategic approach to spreading investments across regions, sectors, and strategies can provide a robust framework for safeguarding and growing wealth.

Here are some opportunities we currently see in this context.

First, regional diversification.

We continue to hold an underweight position in US equities, instead favouring markets in Europe, Japan, and Switzerland.

These regions have demonstrated encouraging performance and present notable growth potential.

This year, we’ve adopted an overweight stance on each of these markets, increasing our exposure accordingly.

Next, sectoral diversification.

The healthcare sector, we believe, offers a rather compelling recovery narrative.

While it has underperformed in recent times, the sector now benefits from greater regulatory clarity in the United States.

Meanwhile, technology remains a promising area, though we advocate for a more discerning approach here—focusing on quality over momentum to mitigate risks tied to overvaluation.

Finally, strategic diversification.

The divergence between momentum-driven and quality-driven equities presents an opportunity to prioritise stability and sound fundamentals.

High-dividend equities, in particular, stand out for their resilience in more volatile market conditions.

We recommend funds that lean towards quality and offer strong dividend yields.

These strategies often encompass investments in undervalued or overlooked assets, which are better equipped to weather potential market reversals.

In summary, diversification across regions, sectors, and strategies enables investors to capitalise on strong market momentum while maintaining a focus on resilience and long-term wealth preservation.