Thus, we complement our top-down RV views in stocks and bonds with bottom-up securities selection alpha from end-managers across our platform. All products or services provided to you by any Principal Financial Group company shall only be available in the jurisdiction(s) within which the company providing the product or service is authorized to operate. The relevant Principal Financial Group company reserves the right to make the final determination on whether or not you are eligible for any particular product or service. If you choose to enter a website outside your country of residence, you are advised that it may not be legal in that jurisdiction for you to access or use the facilities available on that Site and the legal requirements of that jurisdiction may prohibit you from dealing or otherwise transacting in that jurisdiction.

Bonds generally tend to be ‘safer’ investments than stocks and are, for example, seen as more defensive. While many central banks may be nearing the end of their easing paths, the Fed’s late entry could inject fresh momentum into the global economy. That said, rising global money supply could also reignite inflation pressures. We expect the Fed to ease more aggressively than others, while central banks like the BOJ may continue tightening gradually. We overweight sovereign bonds and expect U.S. 10-year Treasuries to trade in a 3.75% – 4.50% range. The steepening bias in the U.S. is likely to persist but may face near-term risks due to crowding and potential adjustments in Fed pricing.

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Russia’s invasion of Ukraine further spurred inflation due to higher energy costs. Central banks responded with a series of rate hikes, which is the tool generally used to moderate inflation. ScotiaFunds® and Dynamic Funds® are managed by Scotia Global Asset Management., a limited partnership the general partner of which is wholly owned by The Bank of Nova Scotia. ScotiaFunds and Dynamic Funds are available through Scotia Securities Inc. and from other dealers and advisors. Scotia Securities Inc. is wholly owned by The Bank of Nova Scotia and is a member of the Canadian Investment Regulatory Organization.

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GA Selects Tax-Aware

The value of investments and any income global asset allocation will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested. The Bank of Canada has provided considerable easing to the economy and the upcoming Federal election should result in a more growth-focused direction supported by pro-business policy. Canadian equities remain attractively priced, especially relative to U.S. equities and the Canadian dollar remains weak relative to USD. Bond yields remain attractive at this time, both from an income and capital appreciation perspective.

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Policy risks a distant second to the real economy

The models are managed exclusively by BlackRock’s Global Allocation portfolio management team. China still faces structural challenges related to its property sector, broad deleveraging, and tensions with the U.S. While stimulus uncertainty remains, Chinese policymakers are expected to roll out support for its struggling economy. In other emerging markets, compelling valuations are offset by risks to global trade, keeping us neutral overall.

We prefer sovereign bond markets outside the U.S., such as Italian government bonds (BTPs) and UK Gilts, over Japanese bonds. DisclaimerThe information on this website is given by Principal Global Investors in good faith and has been derived from sources believed to be reliable and accurate as at their date. However, Principal Global Investors makes no representation or warranty of any kind for the accuracy or completeness of the information and it is under no obligation to update or correct any errors in the information after the date of publication.

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These opinions may differ from those of other Invesco investment professionals. This comprehensive report aggregates and analyzes global asset allocation outlooks for 2025 from leading buy-side and sell-side institutions, with a particular focus on capturing alpha through strategic factor positioning and regional allocation. By synthesizing perspectives from major financial institutions including BlackRock, Goldman Sachs, JP Morgan, and others, this analysis provides investors with actionable insights for portfolio construction across asset classes, factors, and geographic regions in an evolving market landscape.

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Currencies Outlook

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Why should an investor consider a diversified portfolio?

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The second quarter of 2025 was a stark reminder that a longer-term lens is critical for investors.

When an asset is assigned Overweight, an analyst or investor typically thinks that it will outperform others in the market, sector, or model. Rate cuts are likely to continue but will need to coincide with further declines in inflation. More time or a shaper slowdown is required to bring inflation to more sustainable levels. U.S. growth is expected to lead the way due to steady consumer spending, stable employment and lower inflation. Momentum is building in Hong Kong and Chinese equity more broadly and we expect this to persist. By contrast, Canada and Australia both screen as expensive and with muted earnings upside.