The W1M Investment Barometer – August 2025
CIO William Dinning and the W1M Asset Allocation Committee remain constructively positioned in a global macro environment which is broadly supportive. With growth positive and inflation gradually declining, but underline the importance, in volatile times, of having an active protection strategy (as embedded in our MPS and multi-asset fund range).
G7 real GDP (% change)
Source: Moody's ratings. Data as at 28th July 2025
G7 inflation rate (CPI, average annual)
Source: Moody's ratings. Data as at 28th July 2025
Recent downward revisions in the US's jobs data mean a recession is not impossible but this is by no means reflected in the US equity market. Risks always exist whether considering geopolitics, tariff wars and consumers facing higher prices; but we have discussed before how keeping a longer term perspective, rather than being driven by shorter term concerning newsflow, is important (Bears sound smart, but optimism pays).
Market movements have left tactical asset allocation (TAA) positioning with marginal preference equities and alternatives at the expense of fixed income. W1M retains this TAA stance in a relatively benign growth and inflation environment.
W1M asset allocation committee positioning August 2025
Equities: have performed strongly leaving W1M positioning modestly overweight; we have observed a broadening of equity market leadership over the year to date as a whole, with a more value cyclical bias evident in the outperformance of industrials, financials and materials, which has favoured our positioning. Diversification remains key, however. We continue to believe that our global, active, high conviction investment approach will serve us well in these markets as proven in earnings season thus far.
Fixed income: underweight over all but with a strong preference for government bonds over credit: W1M will continue to monitor forward employment and inflation indicators, with deterioration in either factor is likely to result in a more cautious stance within portfolios. The risk of a material growth slowdown supports our overweight government bond positioning relative to corporate credit within fixed income portfolios.
Alternatives: overweight. W1M continues to favour real assets over absolute return strategies currently. Gold looks attractive and is a sensible allocation in all portfolios at this juncture in our own view. The Real Assets Fund offers attractive exposure to inflation-linked cash flows (75% of the portfolio has some inflation linkage) and themes such as the energy transition, power and utilities and digital infrastructure. Real asset valuations have adjusted to the rise in interest rates, while many share prices, particularly within the listed investment company sector, trade at a significant discount to Net Asset Value (NAV).
Currencies: interest rate differentials between the UK, the US, and Eurozone are critical in driving currency valuations; the market has priced in a terminal rate of 3% for the US policy rate and 3.5% for the UK base rate; if this view changes, and the market reprices the UK's terminal rate lower, it would probably lead to sterling weakness against the US dollar.
