Simon Doherty

Three quarters of the way through 2025, and despite the negative headlines surrounding trade tariffs and ongoing conflicts, it's shaping up to be another positive year for stock markets. We enter Q4 with our MPS strategies positioned to reflect a modest overweight allocation to equities. While growth and earnings risks are to the downside, a recession looks less likely now than earlier this year, with individual stock opportunities continuing to materialise despite ongoing concerns regarding market concentration and elevated multiples.

From a regional perspective, the strategies are tilted towards opportunities within European (ex UK) and emerging markets (EM) equities. Loosening budgets and fairer valuations remain supportive for the former, while attractively valued EM equities look set to benefit from further stabilisation in the Chinese economy, exposure to Indian growth, as well as IT and commodity companies. Within the strategies' US allocations, we retain a broadly neutral weighting to large-cap technology stocks, albeit remain selective in the companies owned. Elsewhere, we are closely watching the fiscal situations in the UK, US and France given recent volatility. However, government bond yields remain relatively attractive, while index-linked gilts are currently offering an opportunity to lock in yields some 2.0%-2.5% above inflation for 20 years.

Finally, across the strategies' alternative investments allocation we remain positive on the UK real estate investment trust (REITs) sector, with this unloved segment trading at what we perceive to be an unjustified discount given a backdrop of improving fundamentals and appealing income opportunities.

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