Ajith Balan Nair

Global markets extended their rally in Q3, supported by moderating inflation, resilient corporate earnings, and signs of monetary easing. Emerging markets led the way, helped by a softer dollar and improving sentiment but after years of being undervalued, premiums have started to narrow. Developed markets also posted strong gains with the Technology sector continuing to be a key driver, though late-quarter volatility reminded investors of concentration risks. Corporate credit markets also posted positive returns, as credit spreads tightened, reflective of broader positive risk sentiment and strong investor demand for yield.

We remain underweight equities versus peers – a stance we believe offers a more favourable risk-adjusted return in an environment where valuations demand caution. We are happy to explore niche areas of credit as a return generator and our portfolios maintain a low-duration profile, limiting exposure to interest rate volatility, which has been advantageous during recent yield fluctuations. Diversification remains critical; with markets appearing frothy and uncertainty lingering, we are focused on downside protection. Leveraging our institutional heritage, we continue to explore alternative asset classes that can capture selective upside, whilst maintaining resilience amid heightened political and macro uncertainty.  

Looking ahead, the UK Autumn Budget introduces an additional layer of uncertainty for UK investors. While investors broadly expect tax changes, the scale and scope of these measures could shape fiscal stability and sentiment well into 2026. One of the key features of our portfolios is the underweight exposure to UK equities versus the peer group, which we believe is the right approach in a finely balanced market environment.

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