- Multi-Asset Portfolio Manager
United States, Intermediary
Change
The views expressed are those of the authors at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
This is a monthly snapshot of Wellington Solutions’ asset allocation views as of December 2025. It covers global equities, bonds and commodities and complements the more detailed analysis we share in our Quarterly Asset Allocation Outlook.
Key*
*Please note that we use a more detailed key in our Quarterly Asset Allocation Outlook.
We have maintained our modest overweight stance on global equities. In our view, the outlook for risk assets is still constructive, given resilient growth, moderating inflation and reduced rate volatility. Moreover, the fiscal and monetary policy backdrop remains accommodative. Regionally speaking, we have closed out our views on relative value positions with the intent of establishing a new set of views as we go into 2026. We are neutral across regions while we consider these.
US
We have shifted to a neutral stance on US equities. Lower taxes, increased investment and easing rates continue to create a favourable environment for a broad range of companies in the region. We still expect earnings to deliver double-digit growth, although potential volatility around the evolving AI narrative and high valuations could create headwinds.
Europe ex-UK
We have upgraded our view to neutral on European ex-UK equities. Earnings momentum in the eurozone appears to be bottoming out, supported by improving activity data. We also expect fiscal spending in Germany to start coming through, all of which are encouraging developments that we are watching closely.
UK
We have closed our underweight stance on UK equities and moved to neutral. However, structural challenges persist, including limited exposure to the tech sector and ongoing policy uncertainty, which weigh on investment and spending. Hence, we are comfortable maintaining a neutral stance for now.
Japan
We have shifted to neutral on Japanese equities, while remaining constructive on the structural story. Corporate governance reforms and rising shareholder activism point to a compelling long-term narrative, reinforced by a favourable macroeconomic context.
Emerging markets
We retain a neutral stance on emerging market (EM) equities. The global macroeconomic environment is still broadly supportive for EM risk assets, although we are more positive on some markets (Taiwan and Korea, in particular) versus others. China, where the earnings story is still weak, remains valuations-driven.
We maintain our overweight stance on duration, based on opportunities from carry and roll-down given steep yield curves. Inflation remains on a downward trajectory, and while central bank policy paths continue to diverge, we do not anticipate the US Federal Reserve (Fed) starting to hike rates. We also view duration as a diversifier within a multi-asset context. In our view, global yields will remain range-bound, and we are still identifying relative value opportunities.
US
We leave our neutral view on US rates unchanged. Inflation is trending lower and growth continues to be resilient. With uncertainty around the Fed’s policy transition and limited conviction on near-term directionality, we are comfortable maintaining a neutral stance for now.
Europe ex-UK
We maintain our underweight stance on eurozone rates, expressed through German government bonds. With the European Central Bank (ECB) having already delivered substantial cuts, we see limited scope for further easing. Moreover, we think that reduced tariff-related uncertainty and Germany’s fiscal stimulus, which should support growth, are likely to exert upward pressure on yields, further diminishing the likelihood of additional ECB cuts.
UK
We stick with our overweight stance on UK rates. The government remains focused on restoring fiscal credibility, with the building of increased fiscal headroom and reduced issuance. At the same time, inflation is showing signs of cooling, possibly allowing the Bank of England to cut further. Against this backdrop, we believe UK duration offers compelling relative value.
Japan
We have shifted our perspective on Japanese rates to neutral, closing our underweight stance. While our broader thesis remains intact, we made this tactical shift on the back of the favourable move in yields amid fiscal and monetary developments. We are prepared to re-engage in an underweight stance, as we reassess conditions and new triggers emerge.
In credit, we have maintained a neutral stance, consistent with the previous month. While the overall backdrop is still supportive for credit and risk assets, spreads are extremely tight, leaving little cushion against potential market volatility and very limited room for upside.
Investment-grade credit
We remain neutral on investment-grade credit. With spreads hovering near historically tight levels, the risk/reward profile looks less compelling, making it difficult to justify adding exposure at this point.
High yield
Our stance on high-yield credit is also neutral. Despite attractive all-in yields, spreads have been compressed to extremes, reinforcing our preference to stay on the sidelines for now.
Emerging markets
We still hold a neutral view on EM debt. Although the macroeconomic environment and underlying fundamentals remain constructive, spreads have compressed significantly, leaving limited room for upside potential.
We have kept our underweight stance on commodities, driven by an underweight view on oil, where we see supply exceeding demand and expect further downside pressure on prices. Conversely, we remain neutral on gold, while acknowledging its long-term structural appeal and looking for opportunities to engage at more attractive levels.
These asset allocation views are produced by Wellington Solutions, which provides client-centred investment solutions, research and advice ranging from whole portfolio solutions to bespoke single asset class and advisory partnerships. Our solutions platform incorporates expertise across multi-asset, fundamental factor investing and thematic approaches to deliver across a range of client outcomes and objectives. If you wish to discuss your investment challenges, and how Wellington Solutions can help, please contact your Wellington relationship manager or #solutions@wellington.com.
Experts
- Multi-Asset Portfolio Manager
- Solutions Director - EMEA
- Investment Analyst
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Disclosure
For professional and institutional investors only. All investing involves risk. Investment markets are subject to economic, regulatory, market sentiment and political risks. All investors should consider the risks that may impact their capital, before investing. The value of your investment may become worth more or less than at the time of the original investment. If the strategies do not perform as expected, if opportunities to implement them do not arise, or if the team does not implement its investment strategies successfully, then a strategy may underperform or experience losses. Past performance is not a reliable indicator of future results and investments can lose value.
This material is prepared for, and authorised for internal use by, designated institutional and professional investors and their consultants or for such other use as may be authorised by Wellington Management. This material and/or its contents are current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Wellington Management. This material is not intended to constitute investment advice or an offer to sell, or the solicitation of an offer to purchase shares or other securities. Investors should always obtain and read an up-to-date investment services description or prospectus before deciding whether to appoint an investment manager or to invest in a fund.
Any views expressed herein are those of the Wellington Solutions, are based on available information and are subject to change without notice. Individual portfolio management teams may hold different views and may make different investment decisions for different clients. While any third-party data used is considered reliable, its accuracy is not guaranteed.
This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.
Quarterly Market Review — 4Q2025
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