MONTHLY ASSET ALLOCATION INSIGHTS
Shares still have support, but bonds are making a comeback
October’s message from major investment managers is becoming clearer. Most remain positive about shares, supported by company earnings and investment in artificial intelligence. But enthusiasm is becoming more selective, while higher government bond yields are attracting renewed interest.
The question is changing. Rather than simply asking whether shares will continue rising, managers are increasingly considering which markets offer the best opportunities, how much risk they are taking, and whether bonds now offer better value.
For UK investors, there are some useful lessons.
🌍 The Big Picture
Economic growth has remained stronger than many expected, despite rising interest rates, high energy prices and concerns about inflation.
Company profits, particularly those linked to AI investment, continue to support share markets. Yet the cost of financing that investment is rising, while a relatively small number of large technology companies still account for much of the market’s performance.
That is creating a divide between investment managers.
Some, including J.P. Morgan and T. Rowe Price, favour selected US shares. Others, including Amundi, see better opportunities outside the US, particularly in Europe, Japan and emerging markets.
Meanwhile, higher bond yields are starting to look attractive enough for managers to reconsider their defensive allocations.
October’s main message: Remain invested, but pay more attention to valuations, diversification and the type of bonds you hold.
📊 TAA Consensus Tracker
| Asset class | October assessment |
|---|---|
| Global equities | 🟢 Mildly positive |
| US equities | 🟠 Positive, but divided |
| Europe and Japan | 🟢 Selective opportunities |
| Emerging markets | 🟢 Increasing interest |
| Government bonds | 🟢 Improving value, maturity matters |
| Corporate credit | 🟠 Mixed |
| Gold | 🟠 Selective positive views |
| Overall risk | 🟢 Mild risk-on |
What the managers are saying
BlackRock
October view: Less positive on US equities, more positive on short-term bonds.
BlackRock has moved its US equity assessment to neutral in its October positioning, while retaining an overweight in emerging markets.
Its concern isn’t that AI investment has stopped supporting economic growth. Rather, expectations for AI-related companies are high, and investors may face greater volatility as the market questions how much profit will eventually emerge from this spending.
Higher yields have also made short-term US government bonds more attractive.
What changed? BlackRock’s September overweight in US equities has given way to a more cautious stance, while short-term government debt has become a stronger opportunity.
UBS CIO
October view: Positive on equities, but concerned about market concentration.
UBS continues to expect company earnings and economic growth to support shares.
Its October research draws attention to the narrow group of technology companies responsible for much of the US market’s gains.
UBS argues that investors should retain exposure to growth opportunities while spreading investments across sectors and regions.
It also sees a role for high-quality government bonds as yields become more attractive.
What stands out? UBS is still constructive on markets, but its emphasis has shifted towards reducing reliance on a small number of companies.
Invesco
October view: Modest overweight in equities, with a defensive preference within shares.
Invesco’s tactical model remains moderately overweight shares relative to bonds.
Economic growth remains above its longer-term trend, while company earnings continue to benefit from AI-related investment.
Nevertheless, tighter monetary policy could eventually weaken growth.
Invesco therefore favours quality and lower-volatility shares. Within bonds, it is underweight credit but overweight duration, reflecting the potential benefit of government bonds if economic growth disappoints.
What changed? Its broad equity preference remains, but the October report provides a clearer defensive position within equities and fixed income.
Amundi
October view: Mildly positive on risk, with opportunities beyond the US.
Amundi continues to favour diversified equity exposure, including Europe, Japan and emerging markets.
It argues that valuations and earnings prospects in these regions offer opportunities, particularly when compared with the concentration of the US market.
In bonds, Amundi prefers intermediate maturities in the US and remains mildly positive on UK government-bond duration.
For corporate credit, it favours global investment-grade bonds over lower-quality alternatives.
Amundi also retains a positive view on gold, supported by concerns about government debt, fiscal policy and central-bank reserve diversification.
What stands out? Amundi sees opportunities across several asset classes without making a large directional bet on any one market.
Read Amundi’s October investment views
JP Morgan
October view: Positive on US and Japanese shares, with opportunities in high yield and European government bonds.
J.P. Morgan believes continued AI investment and company earnings can support economic growth, even as central banks maintain tighter monetary policy.
Its preferred equity markets are the US and Japan.
Within bonds, J.P. Morgan sees opportunities in longer-duration European government debt, where yields have risen significantly.
It also favours US high-yield corporate bonds, arguing that company fundamentals and the income available remain attractive despite relatively tight credit spreads.
What stands out? J.P. Morgan is more willing than some competitors to take credit risk, while also seeing an opportunity in longer-dated European bonds.
T. Rowe Price
October view: Increased equity exposure, but also more positive on high-quality bonds.
T. Rowe Price has increased its preference for US large-cap growth shares and emerging markets.
It believes earnings prospects and AI investment remain supportive, although technology concentration and valuations need careful consideration.
Interestingly, it has reduced its overweight in UK shares.
It has also removed its cash overweight, increased exposure to high-quality bonds and moved to a neutral position on UK gilts.
At the same time, it has closed its overweight in global high-yield credit.
What changed? T. Rowe Price has become more positive on selected shares and government bonds, while reducing exposure to riskier corporate credit.
Equities: The Case Remains Positive, But Managers Disagree About Where
Company earnings remain the strongest argument supporting equity markets.
J.P. Morgan and T. Rowe Price favour US shares, particularly companies benefiting from AI investment. Invesco remains modestly overweight equities, while UBS expects continued growth.
But BlackRock’s move to neutral on US equities illustrates growing caution.
The concern is that strong profits may already be reflected in share prices. Even companies reporting good results can disappoint investors if expectations have become too optimistic.
Are opportunities spreading beyond the US?
Amundi favours Europe, Japan and emerging markets. BlackRock and T. Rowe Price also see opportunities in emerging markets, while J.P. Morgan is positive on Japan.
These views suggest that investors may find opportunities beyond the largest US technology companies.
There is an important qualification: emerging-market indices can themselves have substantial exposure to technology and semiconductor companies. Investing outside the US doesn’t automatically remove concentration risk.
For investors: Check how much of your global equity portfolio depends on US technology shares. A global fund may be geographically diversified while still relying heavily on a small group of companies.
Government Bonds: Higher Yields Are Changing the Discussion
One of October’s most interesting developments is the renewed interest in government bonds.
Higher yields mean investors can earn more income from newly purchased bonds. They may also improve future returns, although bond prices can still fall if yields rise further.
Managers disagree about which maturities offer the best opportunity.
BlackRock favours short-term US government bonds. Amundi prefers intermediate maturities in the US, while J.P. Morgan sees an opportunity in longer-duration European bonds.
Invesco is overweight duration, partly because bonds could provide protection if economic growth weakens.
T. Rowe Price has also become more positive about high-quality bonds.
Why does maturity matter?
A bond’s duration measures its sensitivity to interest-rate changes.
As a rough illustration, a bond fund with a duration of two years might lose around 2% if yields rise by one percentage point. A fund with a duration of ten years could lose around 10%.
The reverse also applies when yields fall.
These are approximate price effects, before income and other changes.
For investors: Rather than treating government bonds as one investment, consider whether you want predictable income over the next few years, protection against an economic slowdown, or exposure to falling long-term yields.
Each objective may require a different type of bond.
Corporate Bonds: The Biggest Disagreement
High-yield corporate bonds are dividing investment managers.
J.P. Morgan favours US high yield because company fundamentals remain supportive and the total income available is attractive.
T. Rowe Price has taken the opposite direction, closing its overweight in global high yield.
Invesco is underweight credit, while Amundi prefers investment-grade corporate bonds.
Why the disagreement? High-yield bonds offer more income because their issuers carry greater default risk. But the additional yield over government bonds, known as the credit spread, determines how much compensation investors receive for that risk.
When spreads are relatively narrow, investors have less protection if company finances deteriorate.
For investors: A high headline yield doesn’t automatically make a bond fund attractive. Compare the additional income with the risk of defaults, potential price falls and the fund’s exposure to weaker borrowers.
Gold: Still Supported by Some Managers
Amundi retains a positive view on gold.
Its argument focuses on government borrowing, fiscal uncertainty and demand from central banks seeking to diversify their reserves.
Gold can provide a different source of portfolio returns, but it doesn’t pay income and can fall sharply when real interest rates rise or investor demand weakens.
Gold is therefore better considered as a possible diversifier than as a guaranteed defence against inflation.
Where the managers disagree
Three disagreements stand out.
1. US equities
J.P. Morgan and T. Rowe Price favour US shares, while BlackRock has moved to neutral and Amundi prefers greater exposure outside the US.
2. Government-bond duration
BlackRock favours shorter maturities, while J.P. Morgan sees opportunities in longer-duration European bonds and Invesco is overweight duration.
3. High-yield corporate bonds
J.P. Morgan remains positive, whereas T. Rowe Price has removed its overweight and Invesco is underweight credit.
These differences matter because each manager is making a different judgement about economic growth, inflation and the compensation available for taking risk.
There isn’t a single institutional portfolio that every investor should follow.
🇬🇧 What Does This Mean for a UK Investor?
UK equities: Attractive valuations aren’t the whole story
T. Rowe Price has reduced its overweight in UK equities, citing inflation, fiscal uncertainty and concerns ahead of the Budget.
BlackRock’s October allocation also remains neutral on UK shares.
The UK market may appear inexpensive compared with the US, but valuations alone don’t guarantee stronger returns.
Investors should consider earnings prospects, sector exposure and the reasons for the valuation difference before increasing their UK allocation.
Gilts: Higher yields create choices
T. Rowe Price has moved to neutral on UK gilts, while Amundi retains a mildly positive view on UK duration.
That suggests greater interest in government bonds, although managers aren’t necessarily expecting a large rally in prices.
For UK investors, individual gilts held to maturity can provide known nominal redemption amounts and scheduled coupon payments, assuming the government meets its obligations.
Bond funds are different. Their prices fluctuate, and most don’t have a fixed maturity date.
The distinction matters particularly for investors planning withdrawals in the next few years.
Global shares: Check your concentration
A global equity fund provides exposure to companies across many countries, but the largest US companies can still account for a substantial share of its value.
The October research suggests that Europe, Japan and emerging markets deserve attention alongside the US.
That doesn’t necessarily mean selling US shares. It means understanding the exposure you already hold and deciding whether it matches your intended allocation.
Corporate bonds: Separate income from risk
The disagreement over high yield is particularly relevant to investors seeking income.
Government bonds, investment-grade corporate bonds and high-yield bonds serve different purposes.
A portfolio designed to provide stability during equity-market falls may not achieve that objective if much of its bond allocation is invested in lower-quality corporate debt.
Your Portfolio: Four Questions to Consider
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Has your equity exposure become too concentrated? Check the largest companies, countries and sectors across all your funds.
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What is the duration of your bond holdings? Consider how much their prices might move if yields rise or fall.
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Are you being paid enough for credit risk? Review the yield, credit quality and potential losses in your corporate bond funds.
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Does your allocation still match your goals? Institutional views can inform a portfolio review, but shouldn’t replace your investment plan.
So what is the overall view?
October’s institutional research remains mildly positive towards investment markets.
Economic growth and company earnings continue to support shares, but managers are paying more attention to concentration, valuations and the risk of tighter monetary policy.
Government bonds have become more attractive as yields have risen. Yet there is no agreement that longer-dated bonds offer the best opportunity.
Corporate credit presents the clearest division, with managers taking different views on whether the additional income justifies the risk.
The lesson for long-term investors is to be selective about risk, rather than simply taking more or less of it.
Use these views as a check on your existing allocation, not as a reason to rebuild your portfolio every month.
Sources
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BlackRock Investment Institute: October 2026 positioning update.
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UBS CIO: 6 and 23 October 2026.
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Invesco: Tactical Asset Allocation, 8 October 2026.
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Amundi Investment Institute: Global Investment Views, 6 October 2026.
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J.P. Morgan Asset Management: Q4 Global Asset Allocation Views, 1 October 2026.
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T. Rowe Price: Monthly Asset Allocation Update, October 2026.
Research reviewed: 31 October 2026. Only October publications were used for the current views.
© Clearly Investments Ltd. Educational information only. This is not investment advice.
