House view: equities, bonds and infrastructure lead the way

Macro: no recession yet

Central banks, including the US Federal Reserve (Fed) and several emerging market monetary policymakers, are cutting interest rates into what we expect to be a non-recessionary growth environment. Fiscal policy is set to become more supportive in the US and Europe, although the UK is likely to tighten at its upcoming budget review. Trade tensions have eased, with a temporary truce in the US–China tariff dispute reducing uncertainty.

Equities: emerging markets in focus

Corporate earnings growth remains robust, with US companies frequently outperforming analysts’ expectations. Admittedly, we’ve long been conscious of high US valuations and the narrow concentration of the US market. Now, concerns about a possible AI-related bubble appear to have gone mainstream. Our best assessment is that the AI driver of US markets still has some room to run. But with the AI theme at a much earlier stage in China, and equity valuations less challenging across emerging markets, this is where the Aberdeen House View sees more opportunities.

Sovereign bonds: shorter duration favoured

We are positive on government bonds, particularly those with shorter maturities, which we see as a useful balance to the equity view. Renewed Fed rate cuts and the prospect of a more dovish Chair next year should support bond yields. And government bonds may provide diversification in the event of negative demand shocks. But the House View prefers shorter-duration to longer-duration government bonds. This is because long-duration bond yields may remain pressured by higher debt issuance and reduced demand from traditional buyers.

EMD and corporate bonds: spreads tight but yields still attractive

We hold a modestly positive view on emerging market local-currency debt and global corporate bonds. While tight spreads—the extra yield investors demand to hold these bonds versus US government debt as compensation for additional risk—offer a limited valuation cushion, yields remain appealing relative to sovereign paper. Emerging market debt should benefit from more interest rate cuts and controlled inflation, while corporate bond markets are supported by a relatively modest increase in defaults.

Private markets: infrastructure stands out

Infrastructure remains a high-conviction strategy, driven by global needs in AI, defence and energy. Private capital is increasingly required to fill funding gaps as government balance sheets face constraints. Global direct real estate is in the early stages of a cyclical recovery, with undersupply supporting returns, even in previously challenged sectors such as retail and offices. We are neutral on private credit, where there has recently been an increase in some high-profile defaults amid a deterioration in underwriting standards.

Currency: dollar moves to neutral

Our signal on the US dollar has been upgraded from negative to neutral, reflecting recent stability and less attractive alternatives among major currencies. Positioning in short-dollar trades - bets on dollar weakness - has become stretched, while flows into dollar assets have resumed.

Risk management: diversification remains key

Following a strong run in equities, future returns may be more modest and volatile, particularly if sentiment around AI shifts. Elevated economic, political and geopolitical risks underscore the importance of diversification and thoughtful portfolio construction.

For more details on the latest House View, see below:

Source: Aberdeen, November 2025. The views expressed should not be construed as advice or an investment recommendation on how to construct a portfolio or whether to buy, retain or sell a particular investment. Forecast is offered as opinion and is not reflective of potential performance. Forecast is not guaranteed and actual events or results may differ materially.