Asset consultancy firm, Atchison has released its Tactical Asset Allocation (TAA) outlook for Q3 2025, identifying opportunities in international equities, and duration as central banks pivot towards interest rate cuts. Atchison urges caution amid stretched US valuations and persistent geopolitical risks.
Mishan Dahia, Atchison Investment Analyst said, “The macro backdrop is becoming more supportive, with inflation easing and both the Federal Reserve and the Reserve Bank of Australia expected to implement multiple rate cuts before year-end. However, elevated valuations, particularly within pockets of US mega-cap growth companies, necessitate a selective approach.”
“We are tilting towards quality global equities, increasing exposure to duration, and diversifying into alternatives, rather than chasing overheated market segments.”
A central theme of the TAA outlook is the shift in global monetary policy, with major central banks pivoting towards easing. This has created a favourable setting for risk assets, but Atchison emphasises the importance of balancing opportunity with valuation discipline.
Atchison’s key tactical positioning includes:
- Overweight to international equites, supported by expected rate cuts and muted market reactions to recent trade and geopolitical developments.
- Modest to overweight to European equities, buoyed by European Central Bank easing, and foreign investor demand as diversification from US tech.
- Underweight to Japanese equities, where inflation pressures and slowing growth weaken the outlook.
- Increased allocation to alternatives, with a focus on private equity and gold for diversification and downside protection.
Dahia added, “Central bank decisions and earnings dispersion will set the tone for risk assets this quarter. The rate environment is becoming more supportive, but concentrated market leadership and pockets of stretched valuations require investors to remain tactical and disciplined.”
Atchison continues to advocate for diversified portfolios that blend tactical opportunities with structural resilience, leveraging its asset allocation framework to navigate an environment defined by crosscurrents and shifting market regimes.
