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With more rate cuts ahead, we think investors should invest excess cash, money-market holdings, and expiring fixed-term deposits into assets that can offer more durable income. We believe a combination of bond ladders, medium-duration investment grade bonds, diversified fixed income strategies, and equity income strategies can all play a role in sustaining portfolio income as interest rates are cut.

We expect lower US interest rates and fiscal deficit fears to weaken the US dollar over the medium term. Investors should reduce US dollar exposure by hedging, adding international exposure, switching to other G10 currencies, or using options. Gold in our view remains a strong diversifier due to central bank demand, lower rates, and geopolitical concerns. With the Swiss franc likely to appreciate, we recommend considering hedging CHF loans if your income or assets are in other currencies.

Tech sector volatility could linger amid potential economic concerns and geopolitical headwinds, but we still expect AI to be a key driver of equity returns in the years ahead. Investors lacking exposure to the technology sector should use volatility to build up long-term exposure to AI at more favorable prices. Within tech, we see the best opportunities in AI-linked semiconductors, US megacaps, and China's internet leaders. Those with high existing, or concentrated, technology exposure should consider capital preservation strategies to manage potential near-term volatility.

With economic concerns potentially rising in the months ahead, we believe investors should seek out the stocks of "quality" companies—those with strong balance sheets, competitive advantages, and exposure to structural drivers that have enabled them to grow earnings consistently over time. Such companies have historically outperformed the broader equity market immediately before and during recessions. Our preferred stocks are mostly in the technology, consumer, and health care sectors. We also see potential for structural earnings growth among companies exposed to the energy transition.

The race for the US presidency is tight. Although we do not recommend making large portfolio switches based on political expectations, hedging strategies can help investors manage potential volatility and downside risks if markets start to fear changes to trade, foreign, or tax policy. Meanwhile, we see good potential for stocks exposed to reshoring, a topic likely to persist regardless of who wins the US election. In contrast, we see potential risks to consumer discretionary, renewable energy, and parts of the tech sector, along with the Chinese yuan.

Adding exposure to alternative assets can help further diversify portfolio returns. Private equity and infrastructure can help investors diversify exposure to public equity markets, private credit can offer an attractive alternative source of portfolio income, and hedge funds with low correlations to traditional assets can help reduce overall portfolio volatility.