What Are The Big Institutions Doing With Their Money

AI Still Leads, But Inflation Concerns Change The View About Bonds

🌍 The Big Picture

The dominant message this month is “stay constructive, but be selective.” Major institutions are still broadly positive on equities, mainly because earnings remain resilient and AI-related investment continues to support market leadership.

But the simple 2023–25 story of “own equities and let bonds provide some safety” is being tested. Inflation, government borrowing and higher long-bond yields are making duration risk more uncomfortable.

For UK DIY investors, the key point is simple: a global portfolio may already be heavily exposed to US technology, while bond funds may not behave as a perfect shock absorber if inflation remains sticky. The month-on-month shift is not a move away from risk entirely — it is a move towards more selective risk-taking.

📊 TAA Consensus Tracker

Consensus Summary

Overall message: Institutions remain broadly constructive on equities, but more cautious on long-duration bonds and selective on credit.

Morgan Stanley Research

Publication date: 15 May 2026
Source: Morgan Stanley Midyear Investment Outlook

Key comment: Morgan Stanley favours equities, supported by AI infrastructure spending and resilient earnings, but is more cautious on core fixed income and corporate credit.

BlackRock Investment Institute

Publication date: May 2026 tactical views / 18 May 2026 commentary
Source: BlackRock Investment Institute Weekly Commentary

Key comment: BlackRock remains risk-on because of earnings and AI-related investment, but does not see long-dated bonds as a reliable cushion in the current environment.

Schroders Multi-Asset

Publication date: 27 May 2026
Source: Schroders Multi-Asset Investment Views

Key comment: Schroders is constructive on equities, including technology, the UK and Canada, but is cautious on credit, particularly US investment grade bonds.

Amundi Investment Institute

Publication date: June 2026 views; published late May 2026
Source: Amundi Global Investment Views — June 2026

Key comment: Amundi describes its stance as mildly risk-on, but with enhanced protections. It favours selective equities, selected duration exposure and resilient credit.

BCA Research

Publication date: 20 May 2026
Source: BCA Research: Stocks and Bonds Are on a Collision Course

Key comment: BCA is the main outlier, warning that rising bond yields could create a tougher backdrop for both stocks and bonds.

🧠 Institutional Views: A Review

Equities remain the preferred risk asset. Morgan Stanley is the clearest bull, explicitly overweight equities and underweight core fixed income. BlackRock is also constructive, upgrading developed market stocks to overweight. Schroders and Amundi are positive too, but with more emphasis on diversification and protection rather than simply chasing market momentum.

The AI theme is still doing a lot of heavy lifting. The broad argument is that AI infrastructure spending is supporting company earnings, particularly in the US. That matters for UK investors because many global tracker funds are already heavily tilted towards US mega-cap technology. In plain English: you may already own more of the AI trade than you think.

Bonds are no longer being treated as a simple safety blanket. The common concern is long-duration risk. Long-dated government bonds can fall sharply when yields rise, and yields can rise when inflation fears, borrowing needs or geopolitical risks increase. For UK investors, this is a reminder to check what sits inside a bond fund. Short-duration gilts, long-duration gilts, global aggregate bonds and inflation-linked bonds can behave very differently.

Credit is where the consensus breaks down. Schroders is clearly negative, arguing that the extra yield on credit is not attractive enough given the uncertain backdrop. Morgan Stanley also warns that corporate credit could lag if companies issue more debt to fund AI investment. Amundi is more constructive, but even here the tone is selective rather than aggressive. The message is not “avoid bonds”; it is be paid properly for the risk.

Cash and FX are secondary, but still relevant. Morgan Stanley is equal weight cash, while BCA expects the dollar to stay firm near term but weaken over the medium and long term. For UK investors, currency matters because global funds usually carry large US dollar exposure unless hedged. A strong or weak pound can affect returns even when the underlying investment has not changed much.

🤔 The Contrarian View

The biggest outlier is BCA Research.

While most institutions are still broadly constructive on equities, BCA argues that global equity risk-reward looks poor and that rising bond yields could challenge stocks. This matters because it highlights the main risk to the current consensus: markets may be relying heavily on AI earnings strength continuing to offset higher rates, higher oil and sticky inflation.

💡 DIY Investor Takeaway

• Do not treat institutional views as trading signals. They are useful context, not a reason to rip up a long-term plan.
• Check your US and technology exposure. A global tracker is already heavily tilted towards US mega-cap growth, so “adding AI exposure” may mean doubling up on what you already own.
• Look inside your bond funds. Duration matters. A short gilt fund and a long global bond fund can behave very differently when yields rise.
• Be careful with credit risk. Corporate bond funds may look attractive because yields are higher than they were a few years ago, but the extra return needs to compensate you for the extra risk.
• Use tax wrappers first. For UK investors, asset allocation decisions are usually best implemented inside Stocks & Shares ISAs, SIPPs, Lifetime ISAs or Junior ISAs where appropriate.
• Rebalance, don’t react. These views can help you review whether your portfolio still matches your risk tolerance, time horizon and withdrawal needs — but they are context only, not for direct trading decisions.

© Clearly Investments Ltd. Educational information only. This is not investment advice.