- Multi-Asset Portfolio Manager
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ChangeThis is a monthly snapshot of Wellington Solutions’ asset allocation views as of January 2026. 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 further increased our overweight stance on global equities, supported by a constructive backdrop for risk assets marked by above trend growth, falling inflation, supportive fiscal policy and strong global earnings momentum. While valuations remain elevated, we expect robust earnings growth to continue driving returns. Regionally, we upgraded our view on emerging markets equities, while downgrading the UK and remaining neutral across other geographies.
US
We remain neutral on US equities. We continue to expect low double digit earnings growth and we have seen earnings breadth improving meaningfully in recent quarters. Still, we see greater scope for other regions to grow their multiples and deliver stronger earnings growth and therefore prefer to express relative value views elsewhere.
Europe ex-UK
We retain a neutral stance on European ex UK equities. While the region offers some upside from policy support, including German fiscal spending, we believe earnings expectations are too elevated relative to our estimates. In addition, political risk in France may resurface from mid year onwards and could weigh on European assets, leaving us comfortable maintaining a neutral stance for now.
UK
We downgraded our stance on UK equities to a modest underweight as we believe the UK market remains constrained by low earnings growth and a more defensive profile.
Japan
We remain neutral on Japanese equities, having shifted away from our long-standing overweight stance last month. Our neutral view reflects rising risks around yen volatility and rate instability, which could weigh on equity performance, coupled with low earnings expectations and rising valuations.
Emerging markets
We upgraded our stance on emerging markets (EM) equities to a modest overweight. In our view, this is a region where all the stars look aligned: a supportive macroeconomic backdrop, a weak US dollar and strong AI driven capex extending the global semiconductor cycle and driving further earnings growth in Korea and Taiwan. In addition, we see inflation normalising in India and expect policy support in China to help boost consumer demand. We are most constructive on Korea and Taiwan but we are positive on the region as a whole given the very supportive backdrop.
We maintain a modestly overweight view on duration. At current yield levels, we think carry remains attractive. From a regional standpoint, our view on relative value trades has shifted to neutral, but we see value in re engaging should opportunities arise, with France and Japan currently the areas we are monitoring most closely. Overall, we continue to view duration as an important diversifier within a multi asset context.
US
We are neutral in our view on US rates. While inflation remains sticky and growth resilient, signs of slowing are emerging, with labour market weakness becoming the key risk. We expect US rates to stay largely range bound through 2026, which in our view offers only limited tactical opportunities to investors.
Europe ex-UK
We upgraded our underweight view on European rates to neutral. The recent repricing has brought yields in line with our expectations, with the anticipated fiscal impulse and inflationary pressures, particularly in Germany, now largely priced in. While we have no regional views in place at present, we are closely monitoring France for opportunities to revisit our stance.
UK
We have dialled back our overweight stance on UK rates. While we continue to believe that markets are pricing in an excessive amount of fiscal risk for the UK, the disinflation trajectory now appears to be fairly reflected in current valuations. We have adjusted our view on positioning accordingly.
Japan
We remain neutral on Japanese rates. Markets are now pricing in steady policy normalisation by the Bank of Japan in response to firmer inflation and stronger nominal growth. As such, we are maintaining a neutral stance for now, while looking for opportunities to revisit our stance.
We maintain a neutral stance in credit, given tight spreads. While valuations are also a constraint on the equity side, robust earnings help offset this. Tight credit valuations also come at a time when AI-related capex is likely to be funded partially in the investment-grade credit market. We are waiting for a better entry point to revisit our view, with EM debt remaining our preferred candidate.
Investment-grade credit
We remain neutral on investment-grade credit. Spreads are extremely tight, leaving little cushion against potential market volatility and very limited room for upside.
High yield
Our stance on high yield credit also remains neutral. Although all in yields are appealing, spreads are compressed to extreme levels, reinforcing our view that it may be preferable to stay on the sidelines for now.
Emerging markets
We maintain a neutral view on EM debt. That said, the underlying fundamentals of the asset class are more constructive, making it our preferred area within credit; however, we are waiting for a better entry point before engaging.
We retain our underweight stance on commodities, driven by our ongoing underweight view on oil. We continue to expect supply to outpace demand, putting further downward pressure on oil prices. We remain neutral on gold, acknowledging its long term structural appeal but waiting to revisit our view 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.
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.
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.
Experts
- Multi-Asset Portfolio Manager
- Solutions Director - EMEA
- Investment Analyst
Quarterly Market Review — 4Q2025
A monthly update on equity, fixed income, currency, and commodity markets.
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