MAB Quarterly Review Q1 2026 - Adventurous - 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
At the end of February, after a strong period of
performance from UK equities that led to UK
equity market valuations expanding beyond their
historical averages, we removed our modest
overweighting to UK equities, returning to our
Strategic Asset Allocation weight. We remain
meaningfully overweight Japanese equities, a market
which we believe offers exposure to transformative
structural reforms, funding that overweight with an
underweight to Continental European 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 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.
Within each regional equity allocation, we also
blend both passive and active equity approaches
and, within the actively managed components,
also ensure we have a carefully constructed blend
of different investment styles. We utilise our
lengthy investment experience as well as a number
of proprietary, internally developed quantitative
systems to help us with this blending process.
This is a critically important part of how we
construct portfolios because investment styles
can come in and out of favour over a market
cycle, and the prevailing investment style can
change at the drop of a hat.
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For example, back in the dot-com bubble from
1995 to 2000, investing in technology, media
and telecom companies was in vogue and many
businesses in these sectors saw their share prices
bid up to unprecedented levels. At the same time,
more “value-oriented” investment styles focused
on selecting companies based upon a sensible
valuation of their assets and pro昀椀t streams
were completely sidelined. Managers investing
utilising a value style underperformed market
indices by an uncomfortably wide margin and
