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By   Michael Walsh, CFA, CAIA®, FIA

Monthly Asset Allocation Update – March 2026

Our latest market perspectives and portfolio positioning insights

March 2026

View Transcript

Hi, I’m Matt Bance, and welcome to our February ‘26 asset allocation update. I’ll briefly outline how portfolios are positioned and highlight some of the key changes we’ve been making.

Firstly, starting with the overall shape of portfolios.

We continue to hold a modest overweight to risk assets, including equities. Over the past month, we’ve added to existing equity positions, and maintain higher than benchmark allocations in high yield and emerging market debt.

This reflects what we see as a supportive economic backdrop. Fiscal policy is helping to drive a re-acceleration in growth, manufacturing activity is recovering, and that should continue to support corporate earnings. We do recognise that valuations are elevated, and we expect ongoing geopolitical noise. But for us, that’s largely something to fade, not a reason to change the broader trend.

Second, we see attractive opportunities across emerging markets.

Within equities, we believe emerging markets are well positioned, benefiting from strong AI-related demand, their role as commodity producers in several key markets, and the prospect of a weaker dollar.

In fixed income, stronger currencies are helping to contain inflation, giving key central banks room to cut rates. This creates a supportive environment for EM local-currency bonds.

At the same time, we have rotated some exposure from global high yield into EM dollar-denominated debt.  All-in yields remain attractive, and spreads continue to offer a meaningful pick-up versus US corporate credit, especially in higher-yielding segments. Third, we have increased our overweight to small cap equities.

While there have been several false starts for small caps in recent years, we are now seeing a clear inflection in both trailing and forward earnings, which had been missing previously.

Importantly, the lagged effects of earlier policy easing are beginning to feed through, supporting manufacturing activity, and further expected rate cuts later this year should provide additional tailwinds.

Thanks very much for joining us, and we look forward to updating you again next month.
 

Global asset allocation - as of 28 February 2026

* For pairwise decisions in style, market capitalisation (size) and currencies, positioning within boxes represents positioning in the first‑mentioned asset class relative to the second asset class.
T. Rowe Price Europe and UK Regional Investment Committees inform the global asset allocation views. This material is not intended to be investment advice or a recommendation to take any particular investment action.
As of 31 January 2026.

Transcript

Hello, I’m Michael Walsh and I’m pleased to share our March 2026 monthly asset allocation update. I’ll outline three key investment themes shaping our outlook and portfolio positioning.

First, equity market broadening continued in February.
Markets and sectors that have been relatively unloved in recent years have led gains so far in 2026. South Korea, Brazil, Japan and Taiwan rank among the strongest performers, while energy and materials have also fared well. Although global equity market concentration remains historically elevated, investors increasingly believe AI beneficiaries may extend beyond large technology platforms. Our multi‑asset portfolios remain overweight equities outside the US, as well as US small‑caps, reflecting our expectation that their recent strong performance will persist. US small-caps continue to offer relatively attractive valuations, supported by administration policy aimed at boosting domestic growth. Accommodative monetary policy also improves the earnings outlook and supports balance‑sheet repair.

Second, companies worldwide continue to perform well.
Global equity markets have been supported by strong 2025 corporate results, with earnings growth expected to accelerate further in ‘26. Fiscal policy in major economies such as the US, Germany and Japan remains supportive, with many key central banks past the peak of the interest‑rate cycle. In addition to our overall equity overweight, we maintain a positive view on high‑yield debt globally.

Third, fixed income markets remain calm.
Bond‑market volatility has been low in 2026 so far, despite the appointment of a new Federal Reserve chair, speculation around future ECB leadership, changes to US tariff policy and the election of a new Japanese administration promising expansionary fiscal policy. Yields on 10‑year US Treasuries are now lower than at the end of ‘25. We remain cautious on duration within fixed income and expect elevated inflation and looser fiscal policy to push yields higher over the remainder of the year.

Thank you for joining us, and we look forward to sharing our next update in April.

Michael Walsh, CFA, CAIA®, FIA Solutions Strategist
Feb 2026 Investment Insight

Global Asset Allocation: The View From Europe

Discover the latest global market themes
By   Yoram Lustig, CFA, PRM™
Navy background with multi-color boxes Feb 2026 Investment Insight

Monthly Asset Allocation Update – February 2026

Our latest market perspectives and portfolio positioning insights
By   Matt Bance, CFA

 

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This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, nor is it intended to serve as the primary basis for an investment decision. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

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202603-5250677

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