The W1M Investment Barometer – August 2026

Key takeaways

• After a strong second quarter, last month saw risk assets come under pressure as markets reassessed geopolitical risks, inflationary pressures and the sustainability of the AI-led equity rally in Q2.
• Oil prices rose: (Brent crude was up nearly 22% in July) with renewed tensions in the Middle East, raising concerns around inflation-persistence forcing up bond yields rising and interest rates as a result. European natural gas prices surged by around 33%. Energy-related equities, such as Shell, benefited.
• Technology shares corrected following a very strong second quarter for certain sectors such as chip and memory producers: Investors became more sensitive to valuation, capital expenditure discipline and leverage across AI-linked business models. Holdings such as AMD and TSMC gave back some of the gains made in the second quarter but remain up strongly year to date. New investments were established in Texas Instruments and Netflix in July, partially funded by exiting exposure to IBM.
• Currency markets saw intervention: By both the US and the Bank of Japan to strengthen the Yen after it fell to forty-year lows against the US dollar which increased inflation risks in Japan. The pound strengthened marginally versus the euro but remained within a long-term trading range.
• Global equities: They are up year to date but declined around 1% over July. The UK outperformed. supported by its higher exposure to Energy and Financials, while weakness was more pronounced in technology heavy indices. The NASDAQ was down more than 4% as AI and technology stocks corrected and the Korean stock market saw particularly high volatility.
• Fixed income: The returns were negative in July, reflecting renewed inflationary pressures from conflict in the Middle East. UK Gilts fell around 3.6% at the long end of the curve as UK 15+ Year bonds declined highlighting continued sensitivity to inflation expectations and government spending funded by fiscal deficits.
• Industrial commodities: They gained around +2.2% supported by continued infrastructure and technology-related demand, while Gold declined by more than 1% over the month as higher real yields offset safe-haven demand. Within Real Assets Greencoat UK Wind performed strongly rising around 10%) after strong H1 results.

Macro and Fixed Income

Global growth remains positive, with the UK and Europe continuing to lag the US. With conflict in the Middle East easing in Q2 and oil prices falling sharply, inflation expectations have moderated but consensus still expects interest rates to go up modestly in most developed economies in order to get inflation back to target levels. We remain underweight fixed income in this environment.

Expectations for future inflation critical macro variable​

5-year inflation swap rate (%)​

Source: Bloomberg, W1M. As at 12.08.26​

Equities

We have been overweight equities for most of this year; this has been correct despite all the reasons there have been to worry about markets; stock markets have looked through a challenging geopolitical environment. There remains a lot of excitement about “AI” and “hyperscalers”; we remain concerned about index concentration risk given around a third of the MSCI ACWI global equity index is now in AI-related stocks. It would be “healthier” if there were greater breadth and depth in equity markets, in our view. We are not anti-technology stocks but have significant exposure to the sector, however we do not want the portfolio to be dominated by the technology; if an index can be driven up sharply in the short-term by relatively few stocks, it can also fall sharply if those stocks correct. We look to maintain a diversified and resilient portfolio over the business cycle; this is our chosen stance even if it means we can make a positive absolute return but lag the index in the shorter-term.  We continue to find good investment ideas globally and valuations outside technology can look very attractive given strong earnings growth expected around the world this year.

Equities − investment philosophy

We invest in companies where the market underappreciates the quality of the business. This can either be the long-term sustainability of high returns or the improving fundamentals. We call these “Compounders” and “Improvers”.​​

*Based on the holdings in the Global Recommended Portfolio as at 30.06.26. ​

Source: W1M, Google Images. ​

Risk warning: This allocation should be used as a guide only. Differing market conditions may mean the above weightings will decrease or increase tactically. The investments listed are for example purposes and should not be considered as advice or a solicitation to buy or an offer to sell a security.​

Absolute Return and Real Assets

W1M multi asset solutions include investments in real assets, through investments in the energy complex, infrastructure and commodities, to increase diversification and inflation resilience in portfolios. Absolute return focussed investments are included primarily to mitigate volatility but also make a positive return contribution. We are overweight exposures to real assets.

Protection strategies

Even when long-term prospects are good, there can be short-term volatility. W1M multi asset solutions have bespoke protection strategies which aim to mitigate losses when there are sharp market moves. Despite the US-Iran conflict negatively impacting the inflation and interest rate outlook globally, equities have not had any significant sell-offs this year -yet. Nobody can say there definitely will be a crash. Neither can anyone say there definitely won’t be a sharp correction at some point. But, in addition to active positioning within our portfolios, we actively take steps to protect our multi asset solutions, to be ready for whenever volatility may spike. Paying for appropriate insurance tends to be a prudent idea.  

​If you expect Volatility, do you have a Protection Strategy?

How did it perform during Covid-19 crisis?

Actual PS performance vs S&P 500 (TR) ​

Back-tested returns in previous crisis

*Inception: 19th April 2016 Data to from 31.12.19 to 31.03.20​

​Source: Goldman Sachs, Bloomberg, W1M.​

​Figures are calculated on a total return basis, net of fees.

Risk warning: Past performance and simulated past performance is no guarantee of future results and the value of such investments and their strategies may fall as well as rise. ​
You may not get back your initial investment. Capital security is not guaranteed.​

Summary

Global growth remains robust, company earnings are expected to be very strong this year, geopolitical risks appear to be subsiding and, as a result,  interest rates are expected to rise only modestly in order to contain inflationary pressures. In the current market environment, we are overweight our selected equities given corporate profits are strong, underweight fixed income as rates are expected to rise to get inflation back to target levels, overweight real assets for the inflation resilience they add to our portfolios and we implement bespoke protection strategies in case volatility spikes. Risks clearly remain, both in terms of geopolitics and index concentration. The importance of being properly diversified, actively choosing what to own and what not to own, having inflation resilience in portfolios and protection strategies, as we go towards the autumn, seems clear.

August 2026 Asset Allocation Positioning​

*The table shows bond allocations relative to bond composite index​

**Hedging includes gold & Protection Strategy if possible. ​

Source: Morningstar. As at 13.07.26. The weightings are calculated as a percentage of the Waverton Balanced platform model portfolio and the peer group equivalent of Model GBP Allocation 40-60%. MSCI AC World weighting assumes a 60% allocation to equity. The above should be used as a guide only and is subject to change.​

Find the latest Global Outlook update from our Chief Investment Officer, William Dinning here.

Glossary

Fixed Income: Investments such as government and corporate bonds that typically provide regular interest payments and return the original capital at maturity.

Inflation: The rate at which the prices of goods and services rise over time, reducing purchasing power.

Equities: Shares or stocks in companies that give investors ownership and the potential to benefit from company growth and profits.

Real Assets: Physical assets such as infrastructure, commodities, energy resources, and property that can help protect portfolios against inflation.