Monthly Asset Allocation Update – April 2026

Transcript

Hello, I’m Eva Wu, and I’m pleased to share our April 2026 monthly asset allocation update.

Let me walk through what has driven markets this month, how markets have responded, and how we have positioned portfolios.

First, markets are being driven by a clear macro chain: geopolitics, oil, inflation, and policy. Disruptions to energy flows, particularly through the Strait of Hormuz, have introduced a meaningful supply shock, pushing energy prices higher and raising the risk of more persistent inflation. While there are signs of potential de-escalation, the timing remains uncertain, and markets are increasingly focused on second-order effects—how higher energy costs feed through to inflation, government and central bank policy and, ultimately, growth.

Second, despite the uncertain backdrop, markets have remained relatively resilient. Equity markets have been supported by still-decent real growth rates, earnings expectations and ongoing AI investment. However, beneath the surface, leadership has continued to rotate away from large-cap growth and toward value and more cyclical areas. At the same time, investors are increasingly focused on the returns from AI-related capex, as well as potential risks in areas such as private credit. In fixed income, the adjustment has been more pronounced. Yields have repriced higher, particularly at the front end, reflecting inflation concerns, while credit spreads have widened modestly but remain orderly.

As a result, we have positioned portfolios more cautiously, while remaining modestly risk-on. We reduced our overall equity overweight and shifted away from more energy-sensitive regions such as Europe, while increasing our tilt toward more resilient areas, including US large-cap value. In fixed income, we added back some duration to take profits as yields have moved higher, while remaining cautious overall. We also reduced our exposure to emerging market debt to limit risk and increased cash slightly to maintain flexibility.

Overall, while the current shock will likely pass, it may take longer than expected. We remain focused on diversification, inflation resilience and maintaining flexibility as markets adjust to a more uncertain environment.

Thank you for listening, and we look forward to sharing our next update in May.