Edward Lloyd

We continue to advocate an overweight position towards equity markets on the grounds that robust economic growth, particularly in the US, should support earnings growth at current levels. While traditional valuation metrics appear expensive, they are distorted by the concentration of mega cap tech, and look more reasonable when this is accounted for.

The dominance of mega cap tech has also led to greater profitability and higher returns on capital for global equities, which justifies their valuation premium to prior periods.

As for bonds, credit spreads are exceptionally tight, with limited scope for further capital returns. This warrants some profit taking, as we reduce our bond allocation in favour of alternatives.