Broaden beyond US tech
We believe the long-term outlook for AI growth remains intact. However, we have concerns that the market may not easily digest all the debt and equity issuance that AI companies foresee. Furthermore, continued growth in AI capabilities is posing risks to the “moats” of existing digital platforms, and it is hard to tell who the real beneficiaries will be when the dust settles. To balance rising risks with opportunities, we believe investors should bring allocations to the US tech sector back into line with benchmarks.
Capture global and sector opportunities
We believe industrials, US consumer discretionary, health care, and utilities are all benefiting from resilient economic growth and structural trends such as electrification and re-industrialization. In Europe, we expect “leaders” in industrials and technology to benefit from ambitious reforms and global trends, while in Asia, Japan and China offer diversification. After a period of underperformance from Chinese tech stocks, we expect these to rebound with AI tailwinds. We note that the longer energy prices remain elevated, markets that are more susceptible to shocks in energy prices may require a review, such as Japan or Germany.
In addition, our positive view on global industrials also supports the space economy, which in our view is reaching an inflection point. Private investment is surging, satellite technology is advancing rapidly, and launch costs have fallen—unlocking new commercial opportunities. Global defense spending is rising as geopolitical tensions intensify, directly benefiting space-exposed companies. At the same time, AI is making it easier to process and monetize satellite data, expanding the market for space-based services. While risks remain around technology, costs, and commercial viability, the combination of strong momentum, structural demand, and technological progress makes now an attractive entry point for investors looking to capture this emerging global theme.
Add more predictable income
Equity income strategies offer a practical way to add predictability and stability to portfolios, especially in uncertain markets. Companies with sustainably high dividends—such as those in Switzerland or Southeast Asia—tend to be less volatile and more resilient during drawdowns. Their steady cash flows and disciplined payout policies tend to provide a buffer against market shocks, and as interest rates decline, the relative appeal of equity income only increases.
