The multi-asset landscape has been turned on its head over the past few years. From geopolitical instability to persistent inflation and policy uncertainty, the market backdrop has become more complicated, and unpredictable, than many investors are used to.
For financial advisers and portfolio managers, the challenge now lies in making sense of a world where long-standing assumptions no longer hold true. Diversification remains crucial, but the old playbook of simply balancing equities and bonds isn’t cutting it anymore. With global power dynamics shifting, central banks treading carefully, and new risks emerging almost daily, it’s no wonder multi-asset strategies are having to evolve.
So, what does smart portfolio construction look like in 2025? Where should investors be looking for dependable returns? And how are managers thinking about the balance between risk and resilience?
Here are some perspectives from industry experts which featured in our Multi-Asset Fund Insights 2025, looking at the latest thinking and analysis into what’s going on within this key market segment. Readers can check out the full details of the publication here.
Tara Fitzpatrick CFA, Co-Manager of the Schroder Global Multi-Asset Portfolios, Schroders, is thinking globally just now as she explains: “The temporary pause in US-China tariffs has eased recession fears by reducing the risk of a sudden trade shock. In response, we’ve upgraded our outlook on equities, with a focus on US and European financials as this sector benefits from steeper yield curves and relatively lower exposure to trade tensions.
We continue to believe that the disruption created by the Trump administration casts a shadow over the trend of US exceptionalism. With growing policy uncertainty, we’re taking a more globally diversified approach to equity investing, with increased emphasis on European and emerging market equities.
We remain neutral on government bonds. While rising yields have improved valuations, concerns around US inflation and growing debt levels remain. Gold continues to play a key diversifying role in portfolios. We remain negative on energy, where robust supply caps price potential, and cautious on US high-yield credit, where tight spreads no longer reflect underlying risks.
Overall, we’ve re-established an overweight in equities and prefer taking risks through equities rather than credit. We continue to seek opportunities beyond the US, across both equity and currency markets.
For multi-asset investors, now is a good time to think globally and diversify beyond the US.”
Alec Cutler, Fund Manager, Orbis sees today’s markets as “fluid and volatile”. Cutler says: “While we can’t predict short-term moves, much of what we’re seeing aligns with longer-term trends we’ve tracked for nearly a decade. Countries are becoming more inward-looking—prioritising food, energy, and national security—reflecting a broader shift from global cooperation to economic nationalism, reshoring, and self-interest.
Tariffs have been a symptom of this shift, and their unpredictable evolution has reinforced an already inflationary and uncertain backdrop. While recent market rebounds may have eased immediate recession fears, the Federal Reserve still faces a difficult trade-off between managing inflation and unemployment. Economic momentum is weakening—typically a case for rate cuts—yet inflation remains persistent, and expectations are drifting higher, partly due to tariff-related pressures. Raising rates risks hurting the economy; cutting them risks fuelling inflation.
Despite this, long-term inflation expectations remain anchored near 2%, while our analysis points to a more realistic 3.5–4%. That disconnect matters. Portfolios built for a low-inflation world may struggle to deliver in such conditions.
Against this backdrop, we favour US Treasury Inflation-Protected Securities (TIPS), offering attractive real yields and cheap inflation protection; gold, as a guardian against stagflation; and attractively valued equities with resilient demand drivers and strong dividend and free cash flow yields—critical energy infrastructure companies being a key example.”
Jenni Heather Christie, Head of UK Adviser and Platform Sales, BlackRock tells us that the BlackRock team are maintaining a ‘risk-on’ approach saying: “Through recent market volatility, we’ve seen advisers do what they do best – keeping clients calm and focused on remaining invested for their long-term goals. Fundamentally, we believe that the foundations of the economy remain strong, and as a result, we remain risk-on. Positive services and manufacturing activity, a robust labour market, and room for both monetary and fiscal support make a recession over the next 12 months unlikely. As a result, we think the medium-term prospects for equity markets are bright, particularly considering the recent market falls.
Nevertheless, we are aware that the high degree of US policy uncertainty could create short-term market volatility. We expect asset classes like gold and shorter-duration areas of fixed income to provide portfolio stability in this environment. We are also looking for exposure to under-owned areas such as Listed Property and UK Large Cap Equities. We believe that these ‘cheaper’ assets are likely to demonstrate greater resilience during sentiment-based sell-offs. In a similar vein, we have introduced an S&P 500 Equally Weighted holding, funded from our traditional US equity allocation. This moves us away from the very large, reasonably expensive US companies while maintaining exposure to what is fundamentally a very attractive, high-quality market. Against this backdrop, we continue to see many advisers choosing to in-source a partner to manage their clients’ investments, allowing advisers to focus on delivering the best experience they can.”
Jennie Byun, Head of the UK Multi-Asset Investment Specialist team, HSBC Asset Management, tells us why remaining flexible is key to success as she says: “If 2025 has shown us anything, it’s that long-standing market assumptions can- and should – be questioned. US tech dominance faces fresh competition, investors are questioning their US-centric market-cap-weighted exposure, and the safe-haven role of US Treasuries and the US dollar – the former already tested during 2022 – are under pressure.
Yet, markets have staged a strong comeback. After early April’s drama, equity markets recovered their post-Liberation Day” losses and then some. So, does this mean all is resolved? Not quite. Beneath the surface, the ground is shifting—even if recent market moves suggest calm.
With uncertainty running high, advisers face a careful balancing act. Predictions are everywhere, but no one really knows. It’s too early for wholesale shifts, with policy changes and tariffs likely to take years to resolve. The focus remains on flexibility and diversification, building portfolios that can handle multiple outcomes.
While US exceptionalism has been tested, it’s not over just yet. Company earnings are proving resilient; US Treasuries and the dollar face headwinds but, in a diversified and actively managed portfolio, can still retain safe-haven characteristics. In 2025, we believe success lies not in bold bets but in portfolios built to adjust as the landscape evolves.”
For Ben Gilbert, MPS Portfolio Manager, Sarasin & Partners, ‘smart asset allocation’ is key as he explains: “The past few years have been difficult for multi-asset investors, with the old belief that bonds always protect portfolios during market downturns having been disproven.
Big geopolitical shifts have impacted investor sentiment; the march of globalisation has stalled and may even start to reverse. Interest rates, inflation, and market volatility are likely to stay higher. Rapid advances in technology mean that many long-established businesses will be usurped.
We still believe equity – whether public or private – will be the best long-term investment, but we must be selective. The loose monetary era after the global financial crisis floated all boats, but that time has passed. The increasing pressures of demographic change, fractious geopolitics and a technological arms race will sink many. Investors should focus on future thematic winners.
For multi-asset investors, smart asset allocation is more important than ever. The traditional model of simply balancing equities with bonds no longer works on its own. Investors must stay nimble and ready to use a wider range of tools. Alternative asset classes, like private equity, hedge funds, and gold, deserve close study, even if they are not right for every portfolio.”
Harriet Ballard, Portfolio Manager, Aviva Investors, outlines why she and her team are taking a cautious stance right now commenting:
“The introduction of major tariffs has caused significant uncertainty and is expected to hurt economic activity in both the U.S. and worldwide. At the same time changes in the U.S. security role in Europe have prompted European countries to increase their defence and infrastructure spending.
At the moment, uncertainty is the only thing that is certain, and this in itself can be harmful. The U.S. economy is expected to slow significantly this year, and global growth is projected to be about 3%, with risks tilted to the downside. Second-order effects will include weaker consumer confidence and deferred business investment, although the severity and duration of these effects remain uncertain. Higher global trade costs also generate inflation which could make central banks more cautious to mitigate growth shocks with more accommodative monetary policy.
While the highest reciprocal trade tariffs have been postponed providing relief for markets near term, ongoing uncertainty around trade deals will likely continue to inject volatility into equity markets. We maintain a cautious stance, with a modest overweight in equities, an overweight in government bonds, and an underweight position in the U.S. dollar.”
Anthony Willis, Senior Economist, Columbia Threadneedle isn’t writing off the US market just yet saying: “We’re not ready to call time on US exceptionalism. After a stellar few years of outperformance, policy confusion and recent underperformance from some of the ‘Magnificent 7’ stocks has led some to question whether this is the end of US exceptionalism.
The near-term prospects for US equities are not just about tariffs. The direction of the S&P500 can be influenced equally by the ability of some mega-cap tech companies to monetise their investments in AI and justify some of the significant gains we have seen over recent years.
Looking ahead, we know earnings forecasts are set to fall, companies are generally reluctant to issue forward guidance and valuations vary. The recent pullback has made some Magnificent 7 valuations look reasonable while others still appear to be very expensive.
Historically, it has been foolish to bet against the US over recent years, and only time will tell if we witness a definitive shift to a much more isolationist America and a new world order during President Trump’s second term in office. Despite all the noise, the US is still expected to see stronger economic growth than any other G7 country both this year and next. The ongoing tariff episode will weigh on the outlook in the near team, posing downside risks to growth and upside risks to inflation. As such, investors can expect a soft patch in the US economy following a period where many have tried to front-run the tariffs, resulting in activity being subdued for a while. Over the long term though, we expect the dynamism and entrepreneurial spirit of the US to prevail.
US equities continue to trade at higher multiples over other countries, but we believe the stronger earnings potential over time justifies this premium.”
John Stopford, Head of Multi-Asset Income, Ninety-One is also focusing on the current uncertainty saying:
“Our focus as managers of the Ninety-One Diversified Income Fund is to build a portfolio of securities offering dependable income at attractive valuations, capable of delivering a defensive total return. As such, our asset allocation is driven by security selection, not big macro calls. Given worsening risks to company earnings and mostly elevated valuations, despite recent volatility, only a small number of equities and corporate bonds currently make it through our selection process, with those mainly in traditionally defensive areas such as consumer staple businesses. President Trump has materially increased uncertainty around US policy, leading us to question the conventionally defensive role of the dollar and the Treasury bond market, not least given the likely stagflationary impact of tariffs. Fortunately, there are plenty of attractive yielding securities among the broad universe of sovereign bonds outside the US, where interest rates can fall in response to weaker growth, without the fear of much higher inflation. This is true in developed markets like New Zealand and some Emerging bond markets like Mexico. To limit downside risks, we hedge most of the currency exposure from these positions back to Sterling and use simple derivative strategies to protect the Fund against market weakness.”
Markets are not ‘overly expensive’ according to Tom Becket, Co-CIO, Canaccord Wealth, as he comments: “It has been another extraordinary year so far in the decade that we first entitled the ‘Turbulent Twenties’ in late 2019. The rationale behind this christening was that we were ending a decade that global citizens, consumers and investors found relatively comfortable (the ‘Easy Tens’) and heading into one that was set to be the opposite. For once, I wish that we had been wrong.
This year has borne all the hallmarks of the decade so far; geopolitical tensions, political turbulence, societal divides, economic unpredictability, inflation uncertainty and market volatility.
Of course, investors would do well to remember that despite all these challenges, there have been positive returns to be made, and we expect the same going forward. Fixed interest yields are at levels that provide real compensation for investors, whilst disinflationary tendencies, interest rate cuts and a low default environment should aid returns.
At the same time, while equity markets are far from cheap, we would also argue that they are not overly expensive either. Maybe ’fair value’ would be an appropriate term to use. “Some areas look better than others; we are overweight Europe and the UK and like the dependable defensive returns on offer in consumer staples and utilities.
In short, we expect more of the same – sleepless nights, but positive returns, albeit with a lot of volatility along the way.”
And finally, sharing her insights into the importance of ESG integration across multi-asset funds and some of the practical challenges this presents, Sophie Meatyard, ESG Fund Research Director at MainStreet Partners, comments:
“Integrating ESG into multi-asset funds presents unique challenges and opportunities. Unlike single-asset strategies, multi-asset funds must navigate ESG considerations across diverse asset classes, each with its own data availability, materiality, and stewardship mechanisms. For IFAs, this means looking beyond surface-level ESG labels.
Start with universe framing: does the fund exclude controversial sectors or the lowest ESG performers? But also dig deeper—how is ESG risk embedded in portfolio construction? Are ESG scores influencing position sizing or asset allocation? These are critical indicators of genuine integration rather than box-ticking.
The investment team’s expertise is equally vital. ESG risks differ significantly between equities and fixed income, so a team with cross-asset ESG fluency is a strong signal. Also, assess how well investment desks collaborate. In multi-asset strategies, siloed thinking can obscure ESG risks or opportunities that span asset classes.
Engagement and voting are further differentiators. While voting is equity-specific, engagement is crucial across the board—especially for recurring bond issuers.
At MainStreet Partners, we apply an absolute ESG and Sustainability due diligence framework.
Our three-pillar approach—evaluating the asset manager, strategy, and portfolio—produces a one-to-five rating, independent of benchmarks or peer groups. Of 144 mixed asset funds assessed, 93 met our ESG Assessed threshold, with 18 qualifying as Sustainability Assessed. This shows that while ESG integration in multi-asset funds is complex, it is achievable and measurable.”
Staying sharp in a shifting world
If one thing is clear from these expert insights, it’s that flexibility is no longer a luxury, it’s a necessity. With inflation, tariffs, and monetary policy all in flux, multi-asset investing has become less about riding the economic cycle and more about positioning for resilience. And while views may differ on what comes next, there’s a shared belief in the power of active management, thematic thinking and global diversification to guide portfolios through the chaos.
Multi-asset may not be easy right now, but it remains essential.
