Global Equity portfolio outlook, positioning, and attribution as of 09/30/2025
September 30, 2025
Outlook:
- While we continue to observe late-cycle economic conditions in the U.S., following a slowdown in the first half of the year, we also see a path towards a continuation of the economic cycle as policy focus shifts toward more stimulative measures such as tax cuts and deregulation.
- The combination of protectionist trade policy, cuts to government spending and jobs, diminished private sector hiring, and sluggish disposable income growth reduces the likelihood of a sustained reacceleration in growth in the U.S., in our view.
- We see healthy corporate earnings growth as providing support for the U.S. equity market, driven in part by ongoing AI infrastructure investment, though elevated valuations may be a headwind to further upside.
- With the Federal Reserve on a path toward policy recalibration, we believe the yield curve re-steepening process can continue, for now, as resilient U.S. economic growth in the intermediate term and stubborn inflation could limit the downside to longer-term interest rates.
- Internationally, most major economies still face sluggish growth and risks from U.S. trade policy.
- We have seen, however, signs of improvement in Asia, and particularly EM Asia, such as a stabilizing credit and property market backdrop in China, a pivot to more stimulative monetary policy among the region’s central banks, and renewed growth in high-tech manufacturing.
Portfolio Positioning:
- In our view, the evolving late-cycle economic environment warrants a balance of exposures to defensive areas of the market as well as areas that should benefit if economic growth persists.
- We are avoiding most cyclical early-phase U.S. sectors, but retain exposure to Financials, which could benefit from a steeper yield curve and an extension of the cycle, and mid-phase U.S. sectors for their select economic sensitivity and positive secular growth tailwinds.
- We are overweight late-phase, defensive U.S. sectors including Health Care, Consumer Staples, and Utilities, which we expect can outperform as growth slows.
- We remain underweight international equities, overall, but maintain an overweight of EM Asia, amid signs of economic improvement, and a modest overweight of Developed Asia.
Q3 Attribution
Positive Contributors:
Underweight
- Western Europe
- U.S. Industrials
Negative Contributors:
Overweight
- U.S. Consumer Staples
- U.S. Health Care
Underweight
- U.S. Information Technology
Attribution Analysis is relative to the MSCI ACWI (Net) Index benchmark and was current as of the date specified in this presentation. A complete attribution report is available upon request.
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Any portfolio characteristics, including position sizes and sector allocations among others, are generally averages and are for illustrative purposes only and do not reflect the investments of an actual portfolio unless otherwise noted. The investment guidelines of an actual portfolio may permit or restrict investments that are materially different in size, nature and risk from those shown. The investment processes, research processes or risk processes shown herein are for informational purposes to demonstrate an overview of the process. Such processes may differ by product, client mandate or market conditions. Portfolios that are concentrated in a specific sector or industry may be subject to a higher degree of market risk than a portfolio whose investments are more diversified.
Holdings, Sector Weightings, and Portfolio Characteristics were current as of the date specified in this presentation. The listing of particular securities should not be considered a recommendation to purchase or sell these securities. While these securities were among WestEnd Advisors’ Global Equity holdings at the time this material was assembled, holdings will change over time. There can be no assurance that the securities remain in the portfolio or that other securities have not been purchased. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities presently in the portfolio. Individual clients’ portfolios may vary. Upon request, WestEnd Advisors will provide a list of all recommendations for the prior year.