Portfolio positioning – September 2025
A steadier quarter for markets, but opportunities remain.
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After the significant volatility we saw in the first half of 2025, the third quarter has been calmer, with steady gains across most major markets. It has also been a quieter period for portfolio activity.
From the low point of the year in early April, global equities have rallied by close to 30%. We considered reducing our equity exposure but decided against it. While sentiment and valuations are looking stretched in some areas, this is not true everywhere. Fundamentally, equities are still supported by rising earnings and reasonable growth in the US economy. The latter should be supported by tax cuts and interest rate cuts, as well as less uncertainty about tariffs.
Steady gains for equities this quarter
Major global equity markets, rebased to 100
Source: LSEG Workspace, 16 September 2025. Performance is price return in local currency. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.
Asian markets
Tariff negotiations and trade deals have helped Asian markets, which have performed particularly well since the summer. In China, this has been driven by domestic buyers, who are feeling more optimistic about government efforts to boost growth, as well as strong results from the tech sector. In Japan, the rally to record highs has come with greater support from international investors, who remain excited about economic and corporate reform.
We have exposure to both the Chinese technology sector and broader Japanese equities within client portfolios. Valuations continue to look reasonable, especially compared to the US.
The healthcare sector
One area where we have been increasing exposure is global healthcare. The sector has lagged the MSCI All Countries World Index over the last year, leaving its valuation relative to the global index in the lowest 25% of observations. We believe this fairly reflects the risk from the Trump administration’s policy proposals, including a plan to link the price paid by the US government for drugs to the lowest price paid in other markets (a “Most Favoured Nation” policy).
In the meantime, healthcare companies are seeing faster earnings growth than global equities overall and analysts are raising estimates. We see potential for the sector to outperform.
Diversifiers
We bought a long-dated gilt last quarter at roughly the same level it is at now. In our view, it offers an attractive annualised return and we are being well compensated for taking on longer-term investment risk. This has not been the case for much of the past few years.
Our allocation to gold continues to perform well, as the metal price reached a new record in September. The trends driving this rally – including central banks looking to diversify away from the US dollar and concerns over the independence of the Federal Reserve – look set to continue and we retain our exposure.
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Issued in the Channel Islands by Cazenove Capital which is part of the Schroders Group and is a trading name of Schroders (C.I.) Limited, licensed and regulated by the Guernsey Financial Services Commission for banking and investment business; and regulated by the Jersey Financial Services Commission. Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements. All data contained within this document is sourced from Cazenove Capital unless otherwise stated.
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