The W1M Investment Barometer - September 2025

24 Sept 2025|7 min read

Senior Investment Director

CIO William Dinning and the W1M Asset Allocation Committee remain constructively positioned in a global macro environment which is broadly supportive with interest rates expected to decline in the US, the UK and elsewhere and company earnings growth looking to be positive. The importance, in volatile geopolitical times, of having an active protection strategy and inflation resilience in real assets (as embedded in our MPS and multi-asset fund range) is underlined.

Risks always exist whether considering geopolitics, tariff wars and consumers facing higher prices; we have discussed before how keeping a longer term perspective, rather than being driven by shorter term newsflow, is important. CIO Bill Dinning has pointed out that current US tariff revenue collection rates are heading to be around $350bn over a year and that is equivalent to something like a 7% tax increase. How will that $350bn be shared out between profits falling and prices rising? Price rises are inevitable even if companies share some common tariff costs. So, one surprise possible into next year is that the markets do not get the interest rate cuts that are currently hoped for in the US if prices rise (inflation) more than expected owing to tariffs.

Tariff policies create uncertainty and inflation risk

US imports average effective tariff %, 1790 – 2025 est.

US customs duties revenues, US$ billion, 2010- 2025 monthly

Source: US Treasury, State of U.S. Tariffs: July 28, 2025 | The Budget Lab at Yale W1M. As at 24.09.25

There are always risks, but for now, markets expect interest rates to fall several times in the US over the next year and global earnings growth to be positive.

2025 Earnings growth estimate

+10% globally and +9% for the US 2026e

Source: MSCI, FactSet, W1M. Data as at 24.09.25

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 but diversification remains key. We continue to believe that our global, active, high conviction investment approach will serve us well in these markets and have added to global sector winners such as CATL (a leading battery maker).

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 (as consumers face higher prices) 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.