Simon Doherty

US equity valuations have dipped during the recent market decline, with the sell-off driven by policy uncertainty and a corresponding change in sentiment, as opposed to significant earnings revisions. Furthermore, while recent developments have caused alarm, it's worth noting that most economic indicators are not flashing warning signs, and there remains a reasonable margin of safety above a recession. Against this backdrop, we retain our marginal overweight to equities, with a corresponding tilt towards high quality sovereign bonds.

Looking ahead, there are three potential areas of concern that we continue to keep a close eye on: - The predicted slowing in the growth of AI capital expenditure. - The detrimental effect that higher levels of uncertainty can have on growth stocks. - Higher interest rates due to trade tariffs. With these potential risks in mind, our experienced research team continuously monitors the businesses, industries, asset classes, and equity regions that could be impacted. In turn, our unique Building Block structure enables the MPS team to act swiftly across strategy exposures, mitigating risks and taking advantage of opportunities as they arise.

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