MAB Growth Quarterly Review Q4 2025 - Flipbook - Page 8
Market outlook
As a reminder, each of the Multi-Asset Blend Funds has a distinct long-term
Strategic Asset Allocation that is speci昀椀cally formulated based upon each Fund’s
stated risk pro昀椀le. The higher the risk-pro昀椀le selected, the more is allocated to
equities and the less to diversi昀椀ers such as bonds, real assets or absolute return
strategies. Around that strategic asset allocation, we implement tactical tilts
when we observe highly attractive return opportunities where we believe the
risk-reward is strongly in our favour.
Equities
Your Fund is spread across six equity regions
comprising the UK, US, Global, Continental Europe,
Emerging Markets and Japan. Unlike many portfolios
that are heavily concentrated in the US equity
market simply because it dominates global indices,
we deliberately maintain a broader regional spread.
We believe this reduces risk and increases the
chances of more consistent long-term returns.
You may recall that after a strong run we removed
our tactical overweight to the UK equity market
in mid-February. This has proven to be fortunate
timing as since this reduction the UK equity
market has been broadly 昀氀at, making it one of the
weakest major equity markets globally. Unlike the
technology-heavy US and Emerging Market stock
markets that have performed particularly well since
this point, the UK equity market has a lack of leading
technology companies feeding into the current AI
frenzy. The UK market also has a higher prevalence
of energy companies, healthcare companies and
commodity-related companies that have generally
lagged over this period. Undoubtedly investor
appetite for the UK has also not been helped by
elevated political uncertainty which has culminated
in the recent resignation of the UK Prime Minister.
In our experience, trying to predict political
outcomes isn’t overly helpful for forecasting equity
market returns, however we suspect this period
of policy uncertainty is not helping to unlock some
of the value that continues to lie within certain
segments of the UK equity market.
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At a headline level Emerging Markets have
performed very strongly this year. This is an area
your Fund is meaningfully exposed to within its
equity component and our underlying active
managers have been well placed to take advantage
of the signi昀椀cant pro昀椀t growth being observed
across semiconductor manufacturers and the supply
chain that feeds into the current AI-related boom.
However, we should never forget that Emerging
Markets are not a uniform group but are in reality
a collection of many very different underlying
countries, economies and governance structures.
While the technology-heavy equity markets of
Korea and Taiwan have risen sharply, large equity
markets like India and China have actually declined
this year. Other smaller markets like Indonesia
have also experienced signi昀椀cant sell-offs in their
equity markets and currencies for more domestic
policy-related concerns. As a result, despite the
strong run in the broad Emerging Market index,
we still think there are plentiful opportunities for
our active managers to take advantage of alongside
the ongoing theme in AI-related sectors, and we
are maintaining our healthy long-term holding in
these markets.
We remain tactically positive towards Japanese
equities. After many years of de昀氀ation (falling prices
for assets, goods and services), Japan has entered
a “re昀氀ationary” phase supported by rising wages,
improving growth, and sustained price in昀氀ation not
seen in decades. This prompted the Bank of Japan
