The W1M Investment Barometer – July 2026

Key Takeaways

• Equities remain favoured despite uncertainty: W1M stays overweight equities, believing markets have largely looked through geopolitical tensions and continue to be supported by resilient global growth and strong corporate earnings expectations.
• Higher interest rates create a cautious outlook for bonds: Although inflation has eased, it remains above target, meaning interest rates are still expected to rise modestly. As a result, W1M remains underweight fixed income.
• Diversification is increasingly important: With AI-related stocks making up a significant proportion of global equity indices, W1M favours maintaining a well-diversified portfolio rather than relying on a small number of technology companies.
• Real assets and protection strategies help build resilience: Overweight allocations to real assets, alongside bespoke protection strategies, are designed to improve inflation resilience and help manage periods of heightened market volatility.

Last month, markets were encouraged by the prospect of the war between the US and Iran potentially ending; new conflict has led to oil prices rising again recently, creating renewed concern regarding inflation and global growth impacts. The UK now has a new Prime Minister and Chancellor; bond markets are watching closely to see if fiscal discipline will be eased or not. Are taxes going up? Most economists think they will have to as spending cuts are not being proposed by the government. How can Europe (including the UK) compete more strongly with the US and China to create more jobs and attract greater investment? Will there be a summer swoon in stock markets? There are lots of questions on investors’ minds.

Macro and Fixed Income

Global growth remains positive, with the UK and Europe continuing to lag the US, but inflation remains an issue. With conflict in the Middle East easing in Q2 and oil prices falling sharply, inflation expectations have moderated but consensus still expects interest rates to go up modestly in order to get inflation back to target levels. We remain underweight fixed income in this environment.

Inflation and interest rates expectations

Spot Oil Price vs. 2yr Inflation Expectations vs. 2yr US Treasury Yield

Source: Bloomberg, W1M. Data as at 30 June 2026

Market Implied Policy Rate Change by Dec-26

Source: Bloomberg, W1M. Data as at 30 June 2026

Equities

We have been overweight equities for most of this year; this has been correct despite all the reasons there have been to worry about markets; stock markets have looked through a challenging geopolitical environment. There remains a lot of excitement about “AI” and “hyperscalers”; we remain concerned about index concentration risk. The chart below shows that over a third of the MSCI ACWI global equity index is now in AI-related stocks. It would be “healthier” if there were greater breadth and depth in equity markets, in our view. We are not anti-technology stocks but have significant exposure to the sector, however we do not want the portfolio to be dominated by the technology; if an index can be driven up sharply in the short-term by relatively few stocks, it can also fall sharply if those stocks correct. We look to maintain a diversified and resilient portfolio over the business cycle; this is our chosen stance even if it means we can make a positive absolute return but lag the index in the shorter-term. 

Over a third of  global equities (MSCI ACWI index) is now in AI-related stocks, with 20% in direct hyperscaler capex beneficiaries

Definitions: AI capex beneficiaries include companies for which a significant proportion of revenues is derived from datacentre build-out, and where this expenditure is a key driver of share price performance. This group includes semiconductor and semiconductor equipment companies, as well as a selection of industrial and technology hardware businesses that are direct beneficiaries. *Total AI also includes the hyperscalers, Chinese internet and cloud platforms, and a selection of software companies directly involved in AI.

Source: MSCI, Factset, W1M. As at 30 June 2026.

We continue to find good investment ideas globally and valuations outside technology can look very attractive given strong earnings growth expected around the world this year.

We invest in companies where the market underappreciates the quality of the business. This can either be the long-term sustainability of high returns or the improving fundamentals. We call these “Compounders” and “Improvers”.

Source: W1M, Google Images.

Risk warning: This allocation should be used as a guide only. Differing market conditions may mean the above weightings will decrease or increase tactically. The investments listed are for example purposes and should not be considered as advice or a solicitation to buy or an offer to sell a security.

Absolute Return and Real Assets

W1M multi asset solutions include investments in real assets, through investments in the energy complex, infrastructure and commodities, to increase diversification and inflation resilience in portfolios. Absolute return focussed investments are included primarily to mitigate volatility but also make a positive return contribution. We are overweight exposures to real assets.

Protection strategies

Even when long-term prospects are good, there can be short-term volatility. W1M multi asset solutions have bespoke protection strategies which aim to mitigate losses when there are sharp market moves. Despite the US-Iran conflict negatively impacting the inflation and interest rate outlook globally, equities have not had any significant sell-offs this year -yet. Nobody can say there definitely will be a crash. Neither can anyone say there definitely won’t be a sharp correction at some point. But, in addition to active positioning within our portfolios, we actively take steps to protect our multi asset solutions, to be ready for whenever volatility may spike. Paying for appropriate insurance tends to be a prudent idea.  

If you expect Volatility, do you have a Protection Strategy?

How Did it Perform During Covid-19 Crisis?

Actual PS performance vs S&P 500 (TR) 

Back-tested returns in previous crises

*Inception: 19th April 2016  Data to from 31.12.19 to 31.03.20

Source: Goldman Sachs, Bloomberg, W1M.

Figures are calculated on a total return basis, net of fees.

Risk Warning: Past performance and simulated past performance is no guarantee of future results and the value of such investments and their strategies may fall as well as rise.
You may not get back your initial investment. Capital security is not guaranteed.

Summary

The US-Iran conflict has negatively impacted the global economy; interest rates are expected to rise modestly in order to contain inflationary pressures. However, global growth remains robust and company earnings are expected to be strong this year and next. In this environment, we are overweight equities as markets seem to have “looked through” geopolitical challenges, underweight fixed income as rates are expected to rise, overweight real assets for inflation resilience and we implement bespoke protection strategies in case volatility spikes. The importance of being properly diversified, actively choosing what to own and what not to own, having inflation resilience in portfolios and protection strategies, as we go into the summer, seems clear.

*The table shows bond allocations relative to bond composite index

**Hedging includes gold & Protection Strategy if possible.

Source: Morningstar. As at 13.07.26. The weightings are calculated as a percentage of the Waverton Balanced platform model portfolio and the peer group equivalent of Model GBP Allocation 40-60%. MSCI AC World weighting assumes a 60% allocation to equity. The above should be used as a guide only and is subject to change.

Glossary

Fixed Income: Investments such as government and corporate bonds that typically provide regular interest payments but can be negatively affected by rising interest rates.

Overweight: Holding a larger allocation to an asset class than a benchmark or neutral position because it is expected to perform relatively well.

Real Assets: Investments in tangible assets such as infrastructure, energy and commodities, which can help provide diversification and protection against inflation.

Diversification: Spreading investments across different asset classes, sectors and regions to reduce risk and avoid over-reliance on any single investment or market trend.