Asset allocation in an equity bubble

We expect equities to outperform most other assets as an AI-fuelled bubble continues to inflate, supported by a backdrop of resilient economic growth and monetary easing cycles. In particular, we expect US equities to continue to lead the charge, with the IT sector remaining around the front of the pack. Given our view that central banks will cut rates by more than investors are discounting, we anticipate decent returns from government and corporate bonds over the coming years, though we expect both to lag equities. And we think commodities in general – many of which have fared well so far this year – will struggle over the coming years.