Global Equity portfolio positioning intra-quarter update as of 03/06/2026

The global economy has started to show signs that growth may be converging across regions following years of U.S. economic and market leadership. Improving fundamentals in Europe are underappreciated, in our view, while tailwinds in Asia now seem widely recognized even as we see increased risks.

March 6, 2026

ACTIONS and OVERVIEW:

Shifted to an overweight of European equities

• Added to existing Western Europe equity ETF position

Reduced Emerging and Developed Asia equity exposure

• Trimmed existing Developed Asia equity ETF holding
• Trimmed existing Emerging Asia equity ETF holding

We believe expansionary fiscal policy initiatives in Europe, paired with a stimulative impulse from lower short-term interest rates, can provide tailwinds for European sectors and industries that have experienced challenges over the last several years, including industrial goods, machinery, capital equipment, and manufacturing.  Additionally, recent trends in consumer confidence and credit expansion suggest an improving backdrop for European households.  We believe this supportive fiscal and monetary policy along with improving consumer fundamentals creates an attractive setup for Europe.

The outlook for Asia, meanwhile, has become less compelling, in our view, as valuations have re-rated higher, sentiment has improved alongside a strong memory chip cycle, and robust earnings growth now appears well-anticipated by the market at a time when further acceleration in economic growth looks unlikely.  With European equities now expected to generate earnings growth at-or-above that of Developed Asia, we view the opportunity to overweight Europe at the expense of Asia as relatively attractive and have adjusted global portfolios accordingly.

UPDATE DETAIL:

Shifted to an overweight of European equities

• Global activity has shown early signs of broadening beyond AI and semiconductors into “old economy” areas that have been challenged in recent years (e.g., industrial goods, capital equipment, luxury goods, and autos) – a dynamic we think benefits Europe’s production-oriented equity market.
• Years of soft consumer spending in Europe and elevated consumer savings rates have left ample room for credit expansion which, along with improving consumer confidence, could provide fuel for an improving goods cycle.
• Monetary and fiscal policy are aligning in Europe, with expansionary fiscal policy and the ECB already cutting rates close to neutral—a combination that we believe should bolster both economic activity and earnings growth.
• Improving economic and earnings growth relative to other regions has historically been favorable for Europe’s performance relative to global equities.

Reduced Emerging and Developed Asia equity exposure

• We believe an underweight of Asian equities is now prudent amid a backdrop of elevated valuations, strong realized equity performance, and risks to regional growth.
• Japan’s strong nominal GDP growth could face risks from decelerating consumption and fixed investment trends; and while stimulative fiscal policy has led to near-term market optimism, its economic benefits can take time to realize and, in the interim, monetary policy is expected to tighten.
• South Korean equities have more than doubled in the last year amid a surge in memory prices that may prove unsustainable, and our work suggests that revenue for South Korean equities would need to sustain mid-teens growth to justify their current market capitalization.
• Our positive thesis for mega-cap, tech-adjacent companies in Asia has largely played out, with Emerging Asia earnings now expected to grow nearly 40% in 2026 and Developed Asian equities trading at more than17x forward earnings, well above their long-term average.