Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Register

30 July 2026

Home / White Papers 2025

Asset Allocation Committee Outlook 2Q 2025

The Storm Before the Calm?

The Asset Allocation Committee (AAC) came into 2025 with a base case of improving economic growth and decelerating inflation that was supportive for risk assets, while noting that uncertainty around tariffs greatly widened the dispersion of potential outcomes. Now that President Donald Trump is back in office, his policies have indeed been as disruptive as we could have imagined, and trade policy more disruptive than almost anyone expected. We believe that the announcements on April 2 are an opening stance that invites negotiation from trading partners, and that the final tariff outcome will be less costly than the worst estimates. While it is likely that, whatever the final outcome, some lasting damage has been done, we expect U.S. business and markets to regain their animal spirits once the worst of the disruption from tariffs and government spending cuts dissipates in favor of tax-cut extensions and deregulation. That said, President Trump’s approach not only to trade but to longstanding security alliances has already prompted pro-growth policy action in other regions, especially Europe. That growth catalyst has led us to upgrade our outlook for these economies and equity markets, both in absolute terms and relative to the U.S., which in turn results in an upgrade to our view on global equities. These views reinforce our theme of broadening performance in equity markets, but with a growing emphasis on broadening by region as well as by size, style and sector. At the same time, tail risks clearly remain elevated, leading the Committee to maintain a balanced view on asset allocation and a continued focus on assets that can act as ballast against either a growth slowdown or a return to rising inflation.

Download the full paper

  •   1 May 2025
  •      
  •   

 

Leave a Comment:
Firstlinks is sponsored by:
banner

Most viewed in recent weeks

The strange effect of the 30% minimum capital gains tax

The 30% minimum tax on capital gains sits at the heart of the budget's proposed reforms. Yet the mechanics reveal anomalies that introduce unexpected distortions that raise questions about its design.

Does your will qualify for the discretionary testamentary trust exemption?

Treasury has confirmed the exemption many families were hoping for. But buried in the fine print are two conditions that could leave some wills on the wrong side of the exemption, despite years of careful planning.

Ranking three common retirement strategies

The defining challenge of retirement isn't just about building wealth, it's about converting your lifetime savings into sustainable income. A holistic understanding of different strategies can improve long-term outcomes.

Are you making these SMSF mistakes?

After four decades advising investors, there are a few common mistakes I've seen SMSF investors make. From holding too much cash and chasing yield to overtrading and trusting tips. Are these errors costing you?

Why Australian shares are falling behind the world

Australia’s market boasts a long record of outperformance, but recent results tell a different story. Is the ASX’s lagging performance a temporary setback or evidence that structural forces will keep global markets ahead?

Australia has saved $4.5 trillion for retirement. Here's what matters more

Most Australians approaching retirement can tell you the exact dollar value of their super account. But success depends on more than a sizeable balance. Here's four key questions to ask yourself at the start of the financial year. 

Latest Updates

Investment strategies

UniSuper CIO shares his reflections on the 2025-2026 financial year

Markets climbed a wall of worry in FY26, but artificial intelligence remained the dominant force, rewarding some of the world’s biggest companies while leaving others behind.

Planning

Post-Budget blues? A knee jerk won’t help

Sweeping tax changes are reshaping the investment landscape and many investors are considering major restructures. But before chasing lower tax bills, it's worth asking whether those decisions will strengthen—or undermine your ability to build wealth across generations.

Investment strategies

Is value investing still relevant in today’s stockmarkets?

Is value investing relevant in an age when momentum investing, quant strategies and index funds increasingly dominate markets? It is underappreciated how share price distortions may be creating some of the best opportunities for patient, disciplined investors.

Investment strategies

How to find opportunity in global equities

Australia's concentrated market makes global diversification essential, but breadth alone is not enough. Investors still need a disciplined framework combining business quality, sensible valuation and a credible catalyst.

Gold

What keeps the world’s most patient investors returning to gold

While many investors are asking whether gold has peaked, the world's central banks appear to be asking different questions altogether. Their thinking offers useful insights for long-term investors.

Investment strategies

Don’t underestimate Australia

Investor sentiment towards Australia has turned increasingly gloomy, but the data tells a different story. There are still plenty of reasons to remain optimistic.

Superannuation

Are you making these SMSF mistakes?

After four decades advising investors, there are a few common mistakes I've seen SMSF investors make. From holding too much cash and chasing yield to overtrading and trusting tips. Are these errors costing you?

Sponsors

Alliances

Site Map

About Firstlinks

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.