House View Q3 2026: Schokdemping

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

• Despite a fragile geopolitical backdrop, we remain positive on equities, more so from a systematic than fundamental perspective, with a preference for the US and EM over Europe and Japan.
• With AI also becoming an important driver of EM performance, concentration risk should be managed within a broadly diversified portfolio.
• In fixed income, we see fundamental value in bonds, even though the market cycle remains challenging. We prefer EM bonds and, within credit, favour US and European investment grade bonds over high yielders.
• In FX, we have returned to a neutral view on the US dollar after its recent decline. Over the medium term, we see scope for renewed weakness as safe-haven demand eases and valuation and rate headwinds reassert themselves.
• We are constructive on gold in an environment where questions about central bank independence and the US dollar may return to the fore. We continue to be long commodities as a key diversifier, with our preference for gold balanced by a more neutral stance on gas, oil, copper and silver. Given the uncertainty, we also use option strategies to enhance diversification in many portfolios.

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.