Investment Committee - November 2026
Divided Government, Selective Investment
The Committee's Call
Divided government changes the political backdrop, but it does not remove the need for investment discipline. We are constructive on both sovereign and corporate bonds, have extended duration within investment-grade credit, and remain cautious on euro sovereign duration. In equities we are putting some cash to work selectively, but the posture stays defensive. Commodities and energy move to neutral, as the weaker energy picture offsets our continuing support for gold.
The Opportunity in Sovereign and Corporate Bonds
Government yields have retreated from their October highs, and the US ten-year yield now sits below 5%. That stabilisation supports our constructive view on sovereign bonds, particularly in the US. We do not treat it as a permanent resolution of fiscal or political risk: the improvement is provisional, and higher yields could still cause losses for portfolios that move too early.
In corporate credit, we extended duration within investment-grade bonds. This is a measured way to capture income: a longer duration adds value if yields stabilise or fall, but increases exposure if they rise again, so credit quality and interest-rate sensitivity both matter to the outcome.
We remain more cautious on euro sovereign duration, which is distinct from our European peripheral exposure. That exposure has rallied since rating agencies kept stable outlooks on France rather than downgrading, and we retain it. French political and budget uncertainty has not been resolved, however, and we prefer to wait for clearer evidence before adding euro sovereign duration. Resilience in higher-quality issuers should not be assumed to extend to every borrower: lower-rated debt is already facing greater selling pressure, and we will keep assessing whether the compensation justifies the credit risk.
Equities and AI: From Spending Plans to Execution
The AI theme remains important, but the practical question is when investment translates into sustainable returns. Large technology platforms can draw on established businesses and cash generation. Smaller infrastructure providers are more exposed to the cost of funding equipment and the timing of new capacity.
Planning opposition, component availability and construction delays can push back data-centre revenues while financing costs continue. The risks differ across the supply chain, so the correction in AI-related shares should not be read as a single verdict on the technology.
The election adds another layer. A Democratic Congress and a Republican administration may limit major legislative change, while greater oversight and local decisions can still affect the pace and cost of projects. Our task is to distinguish businesses with durable demand and financial resilience from those that depend on uninterrupted expansion.
That discipline shapes how we use cash. Following the October drawdown we are adding to equities gradually and in measured steps, within mandate risk limits, while systematic trend signals remain close to neutral. We do not read recent stability as evidence that the correction is over, and we want earnings and cash generation, not spending announcements, to confirm the case before increasing exposure further.
Positioning
Asset class | Stance | vs. last committee | Committee view and implementation |
Equities | [Defensive] | = | Cash deployed selectively after the October pullback; measured risk and cash-flow scrutiny remain central. |
Fixed Income | [Constructive] | = | Constructive on sovereign and corporate bonds; duration extended in investment-grade credit; cautious on euro sovereign duration. |
Commodities & Energy | [Neutral] | ▼ | Gold retained as a strategic hedge; energy exposure neutral after the fall in oil. |
FX | [Neutral] | = | Maintain a neutral currency stance. |
Alternatives | [Overweight] | = | Retain the previous allocation; no change at this committee. |
What Would Change Our Mind
Renewed rise in sovereign yields: this would test our constructive view on sovereign duration, and we would review our sovereign and corporate exposure.
French fiscal and political clarity: a durable resolution of the budget dispute, with orderly core euro yields, would reopen the case for adding euro sovereign duration.
Strain among leveraged AI infrastructure businesses spreading into broader credit: we would revisit equity risk and reconsider how much cash we deploy.
Conclusion
US sovereign duration, quality corporate credit, disciplined equity exposure and an enduring role for gold provide the starting point. We will reassess these views as financing conditions, the policy outlook and the delivery of AI investment become clearer, and we will not assume that recent relief in markets will last.
This presentation is intended for informational purposes only and does not constitute an offer or solicitation to buy or sell any financial instruments or services. Any investment involves risks, including the potential loss of capital, and past performance is not indicative of future results.
