Debate Winners Asset Allocation Awards 2025: 'Choosing quality amid uncertainty'

Apr 24, 2025

 

MODERATOR Eelco Ubbels, Founder and CEO, Alpha Research, and Co-Founder, OpinioPro.com   PARTICIPANTS Laura Cooper Scott, Investment Strategist, Nuveen Frédéric Degembe, CIO, ING Belgium Angelo Manioudakis, Global Chief Investment Officer, Northern Trust Asset Management Wolf von Rotberg, Equity Strategist, J. Safra Sarasin Dan Scott CIO and Head Multi Asset, Vontobel

 

The Asset Allocation Awards were organized for the third time this year in collaboration with Financial Investigator, and for the second time in Belgium.

The awards are presented to asset managers who have made the most successful allocation recommendations based on consistent research and consistent returns. Alpha Research analyzes approximately 65 reports from asset managers each month and uses them to compile model portfolios. The assessment is based on an equally weighted portfolio without benchmark weighting. An overweighting of an asset is given a weighting of +5%, while an underweighting is given a weighting of -5%. The five best-performing portfolios over a three-year period are nominated and the best-performing portfolio receives the award.

These are the winners for 2025:

• Overall: Northern Trust
• Asset Allocation: Vontobel
• Fixed Income: Nuveen
• Equity sectors: ING Investment Office
• Regional allocation: J. Safra Sarasin

 

The US economy is currently performing very well, partly due to fiscal stimulus over the past two years.

 

After the awards ceremony, the Asset Allocation Debate took place, focusing on the influence of macroeconomic trends, geopolitical tensions, and the recent re-election of Donald Trump as president of the United States. This debate was moderated by Eelco Ubbels, Director of Alpha Research, and was conducted by the five award winners. In attendance were Angelo Manioudakis, Global Chief Investment Officer at Northern Trust Asset Management, Laura Cooper Scott, Investment Strategist at Nuveen, Dan Scott, CIO and Head Multi Asset at Vontobel, Frédéric Degembe, CIO at ING Belgium, and Wolf von Rotberg, Equity Strategist at J. Safra Sarasin.

A quick round of Trump

Each winner was first asked a short question about the possible consequences of Trump's second presidency:

What effect will Trump have on your asset allocation for the next 3 to 12 months?

Angelo Manioudakis: 'Since you want a short answer, I would say ‘risk on’. However, I am somewhat cautious, because although there is optimism, geopolitical uncertainty remains.'

Is there a preference for equities or bonds under Trump?

Dan Scott: 'Trump's policy of low taxes and deregulation is positive for risky assets in the short term, so equities are worth considering. Stimulation of the US economy remains an important factor, but we need to be alert to structural changes.'

The recent consensus favors US equities. Do you agree?

Wolf von Rotberg: 'Trump has given European equities an advantage through the strong dollar. Higher US valuations compared to the rest of the world are justified, but overall US equities are expensive. We will not see the same group of stocks dominating the market this year. Moreover, we see that the effects of Trump's trade policy are not only affecting the US, but also Europe and Asia, making sectoral impact an important factor.'

What does Trump in the White House mean for equity sectors?

Frédéric Degembe: 'We have reduced our overweight in technology. Financials could become interesting due to possible deregulation. In addition, a reduction in corporate tax could give these sectors an extra boost. But the question is how sustainable these incentives will be.'

What impact do you expect on fixed income?

Laura Cooper Scott: 'Investors have already factored in possible measures by the Trump administration. We are cautious about duration risks, but the possibility of higher returns on fixed income is attractive. It is a ‘higher for longer’ environment. Inflation also remains a factor to consider, especially if new fiscal stimulus measures are implemented. This could mean that central banks will have to reevaluate their policies.'

Macroeconomics and geopolitics

The debate then shifted to whether the current high valuations of US equities are an obstacle to further growth. Von Rotberg said: 'America is expensive, Europe and China are cheaper. The US economy is performing very well at the moment, partly thanks to fiscal stimulus over the past two years. However, the momentum of US equities may slow down slightly. Current valuations are largely justified by strong corporate earnings and the robust economy, but we need to remain cautious about sector rotations and possible corrections.'

Scott, on the other hand, was optimistic: 'The S&P could still rise by 10% to 15% this year. That is why we remain overweight in US equities. Growth expectations remain high, especially in technology and consumer-oriented sectors. Historically, US companies have proven to be resilient, even in challenging economic times.'

Manioudakis added: 'We are moderately positive on US equities. We analyze bottom-up and are fairly confident of growth in gross profits ('top line growth'), margin growth, further share buybacks, and dividend growth of 6% to 7%. However, we do take into account a mean reversion of multiples towards the long-term average. The market is strong, but you need to be cautious about sector exposures.

 

The level of government debt has risen significantly, which could have long-term implications for the stability of the bond markets.

 

Fixed income and asset allocation

The section on fixed income discussed the opportunities and risks. Cooper Scott stated: 'Inflation is high and we could see interest rate cuts delayed. The economic backdrop is healthy, expected defaults are low and some sectors are less vulnerable to import tariffs. However, fiscal deficits remain a concern. Government debt levels have risen significantly, which could affect bond market stability in the long term.'

Degembe reflected ING's neutral position: 'We are underweight in government bonds due to rising sovereign debt. We prefer investment grade. We are cautious on high yield, as it is equity-like. The right selection of bonds will be crucial in this market. We are paying close attention to the fundamentals of issuers and are not taking any unnecessary risks.'

Manioudakis added: 'Private credit is our favorite asset class. We are somewhat contrarian on high yield, with an overweight of 6% (recently 5%), with narrow spreads. The index is high quality and defaults will increase slightly, but spreads will remain slightly wider. It's not cheap, but the quality is there. We'll take the 7% coupon.'

 

The level of government debt has risen significantly, which could have long-term consequences for the stability of the bond markets.

 

What are the hot potatoes?

Strategists and CIOs spend a lot of time selecting the best asset class. But sometimes it is just as important to determine which assets are best avoided. That is why the panel members were asked at the end: which asset class do you consider a 'hot potato' that you would rather not have in your portfolio?

Scott emphasized the importance of diversification: 'Risks are unpredictable, which is why diversification is essential. We have allocated part of our portfolio to liquid alternatives, such as cat bonds, which makes us less dependent on government bonds. The concept of the risk-free rate has changed since 2022, and investors need to take this into account in their strategy.'

Cooper Scott explained her organization's approach: 'We are cautious about duration, despite the US economy losing momentum. We are taking a quality-enhancing approach to fixed income and avoiding highly volatile assets such as cryptocurrencies, despite the renewed sentiment for this asset class.'

 

The right selection of bonds will be crucial in this market. We pay close attention to the fundamental factors of issuers and do not take unnecessary risks.

 

Von Rotberg indicated that certain sectors are less attractive within equities: 'We are avoiding the consumer discretionary sector in the US. The sector remains sensitive to economic cycles and inflationary pressures, and the outlook is not convincing enough at this point.'

Degembe mentioned another strategy: 'For us, it's simple: we are underweight in cash. When it comes to US equities, we prefer domestic companies to exporters. Domestic companies can benefit from fiscal stimulus and more stable demand, while exporters face trade restrictions and exchange rate risks.'

Manioudakis explained how his organization allocates: 'We work with a quantitative strategy and avoid low-quality stocks that are too dependent on momentum. We prefer to focus on companies with strong fundamentals and a robust growth profile.' The debate provided a clear picture of the challenges and opportunities in the market for 2025.

 

SUMMARY Investors expect a risk-on environment due to Trump's tax cut and deregulation policies. US equities are generally expensive, but optimism remains about technology and consumer sectors. Inflation and government debt remain risks, but there are opportunities in high yield and private credit. Diversification is crucial, although volatile assets such as cryptocurrencies and certain sectors such as consumer discretionary are best avoided.

Attachments

• FI-2 - 2025 - Red Verslag 11-feb - Debat Winnaars.pdf