Schroders shifts to gold while maintaining equity appetite

The multi-asset investment team remains constructive on cyclical assets, balancing optimism with caution regarding extended market valuations. While the firm warns that high leverage and heavy concentration in AI stocks present potential risks, it sees no immediate signs of a decline in growth dynamics that would necessitate a defensive pivot.

Schroders has bolstered its holdings in technology and expanded its exposure to German equities, specifically targeting the industrial and defense sectors. This strategy is complemented by continued investment in global mining and energy producers. Beyond equities, the firm finds value in fixed income, tactically favoring US Treasuries due to attractive inflation-adjusted yields. The firm identifies accelerating inflation and any significant erosion of investor confidence in AI as the primary threats to its current market positioning.