17 Jul 2026
As markets move beyond geopolitical headlines and refocus on growth, earnings and AI, Portfolio Managers Chris Forgan and Caroline Shaw discuss where they see opportunities and how they are positioning portfolios for the second half of the year.
Markets have a habit of moving on faster than investors expect.
Only a few months ago, geopolitical tensions in the Middle East were dominating headlines and driving market sentiment. Today, investors have largely shifted their attention back towards corporate earnings, economic growth and, above all else, AI.
It is a timely reminder that while headlines may change quickly, successful investing is rarely about reacting to every new development. Our focus remains on building portfolios that can participate in long-term growth opportunities while remaining resilient as market leadership evolves.
Overall, we remain constructive on the outlook. Economic growth continues to hold up well, corporate earnings remain supportive, and policy settings across many major economies are still broadly favourable for risk assets. While uncertainty has certainly not disappeared, we continue to believe equities offer the most attractive opportunities relative to other asset classes.
By contrast, our conviction in broad fixed income remains lower. Credit spreads remain tight and, in many parts of the bond market, we do not believe investors are being sufficiently compensated for the risks they are taking. Instead, we continue to favour specialist active bond managers that can be selective, alongside alternative strategies that provide diversification through different market environments.
Within equities, technology remains one of our highest conviction long-term themes. The investment cycle around AI continues to be supported by exceptionally strong earnings growth and sustained capital expenditure across data centres, semiconductors and digital infrastructure. Unlike previous periods of market enthusiasm, today's technology leaders are generating genuine profits and cash flows, giving us confidence that the structural story remains intact.
However, one of the defining features of markets this year has been the increasing concentration of returns. In the US, a relatively small group of companies continues to dominate index performance. A similar pattern is now emerging across parts of the emerging market universe, where semiconductor manufacturers in Korea and Taiwan have become increasingly influential.
This reinforces the importance of careful portfolio construction. One of the changes we have made recently has been to increase our exposure to the S&P 500 Equal Weight Index. This reduces our reliance on a handful of mega-cap technology companies while maintaining exposure to what remains a healthy US economy. Importantly, it should also benefit if earnings growth begins to broaden beyond the technology sector, something we believe is becoming increasingly possible as other parts of the market remain attractively valued and relatively under-owned.
Emerging markets also remain one of our highest conviction areas, although we are becoming increasingly selective within the asset class. India continues to stand out as an attractive long-term structural opportunity, supported by favourable demographics, strong domestic demand and ongoing reform, despite a challenging year so far. Elsewhere, we continue to see opportunities in areas such as China and Latin America, while remaining mindful that technology concentration has increased significantly in parts of Asia.
Diversification continues to play a central role in how we manage portfolios. We remain positive on alternatives, which provide different sources of return from traditional equities and bonds. Gold continues to serve an important role as a portfolio diversifier, while we also retain exposure to longer-term structural themes such as European defence and industrial metals. Although both experienced some weakness during June, we continue to believe their medium-term fundamentals remain compelling.
Looking ahead, markets may continue to rotate rapidly between themes as economic data, policy decisions and investor sentiment evolve. Rather than attempting to predict every twist and turn, our approach is to build portfolios with multiple drivers of return. By maintaining exposure to long-term growth opportunities while broadening diversification across regions, sectors and asset classes, we believe portfolios remain well positioned for what is likely to be another eventful second half of the year.