Based on the Asset Allocation Consensus of September 2026 and conversations with the three Award winners in September and October 2026.
Two dominant themes, one new rate regime
Since late August, the scope of our consensus on asset allocation has clearly broadened. While investments in AI remain the dominant theme, they have gained a formidable rival: geopolitics, driven by energy.
Renewed tensions surrounding Iran and the Strait of Hormuz have pushed the price of oil back above $100 per barrel; 87.2% of the 39 companies in our September panel now cite this as a defining issue, a figure barely lower than the 89.7% that continue to point to investments in AI.
Something more fundamental is happening in the bond market: a genuine shift in the policy climate. Under new Fed Chair Kevin Warsh, market sentiment has swung from expecting rate cuts to anticipating a ‘hawkish’ stance of maintaining interest rates; 87.2% of firms identified this as a key theme. While our duration reading remained stable at ‘neutral’ in August (38.9% overweight versus 38.9% underweight), it shifted clearly to ‘underweight’ in September (23.1% overweight versus 57.7% underweight), marking the sharpest one-month shift since we began tracking these figures.
What prevents this from being a classic 'risk-off' signal is the overall picture. In fact, equities are increasingly being overweight-positioned (74.1% overweight versus 1.9% underweight), gold is moving closer to 50% overweight and 0% underweight, and within the equity market, AI-related capital expenditure (capex) is broadening from chips to physical infrastructure; meanwhile, utilities stand at 57.1% overweight in our consensus this month.
As a result, the picture has become sharper rather than more blurred: equities are overweight, bonds and duration are underweight, and investments in AI are more broadly diversified than ever. Turning to geopolitics, that is now a factor of equal weight.
Consensus mainly tells you where the majority stands. Our own Asset Allocation Consensus surveys that majority every month among 60+ institutional asset managers worldwide, and that is exactly the benchmark against which we compare the three winners below. At least as interesting is where successful asset allocators deliberately diverge from that majority. So we put the same market picture to three winners of the 2026 Asset Allocation Awards: Federated Hermes, Invesco, and ING Investment Office. All three recognize major parts of the consensus, but within their own specialty, they make slightly different choices.
Federated Hermes: “I’m not worried about higher rates”
Steve Chiavarone, CIO, Global Equities at Federated Hermes, doesn’t automatically see higher rates as a problem. Federated Hermes won our Fixed Income Award this year. “I’m not worried about higher rates,” he says. “Rather than be a story about runaway inflation, this is a normalization of rates to a higher structural growth environment. That’s a positive thing.” That puts him in line with three of the factors behind higher long-term rates cited elsewhere too: stronger growth, more competition for capital, and geopolitical uncertainty.
For Federated Hermes, the real question is where on the yield curve you take that risk.
The short end of the curve
Chiavarone sees the most value at the short end. “We’re willing to take credit risk on the short end of the curve. We tend to like investment grade credits right here,” he says. Further out the curve, toward the belly, the story becomes less compelling: yields of 4.5 to 5% strike him as fairly priced, and spreads there are too tight for his taste. That’s precisely where Federated Hermes prefers to stay on the sidelines.
Equity income instead of High Yield
On High Yield, Federated Hermes is close to our own consensus, we too are net Underweight there. The interesting difference is what Chiavarone buys instead: “Equity income makes more sense than low quality fixed income when inflation is a greater concern than growth.” Rather than take on extra credit risk in High Yield, he’d rather find that income in high-quality, dividend-paying equities, a slightly different route to the same destination.
Emerging Markets Debt: where the real gap appears
It’s only on Emerging Markets Debt that Federated Hermes truly diverges: Chiavarone is tactically neutral here, against a consensus of 72 asset managers that stands net 52.7% Overweight and just 7.3% Underweight, a gap of more than 45 percentage points. He immediately adds a caveat of his own: Federated Hermes runs structurally overweight emerging markets in many portfolios, so a tactically neutral position doesn’t automatically mean a low absolute allocation.
The risk he himself flags most strongly, incidentally, doesn’t lie in the present but further out: that the current AI infrastructure build-out overheats on the way to 2028 and triggers a setback afterward.
Invesco: convinced on AI capex, but not automatically on Technology
Invesco’s response came in writing, from Investment Strategist András Vig, who works in the team of chief strategist Paul Jackson (Global Market Strategist EMEA and winner of the Equities Sectors Award).
Mid-cycle, with rates as the biggest risk
Vig still places the economy in the mid-cycle phase, moving toward late-cycle. “My view remains that we are in the mid-cycle phase, approaching late-cycle, so growth should still be positive supporting risk assets,” he says. For the next twelve months, though, he sees the rise in government bond yields as the bigger risk: “I can easily imagine a scenario where higher borrowing costs restrict some of the spending that has been planned in the next 12 months both for governments and corporate borrowers.” Short-duration assets, he adds, “may be less sensitive to further increases in yields than long-duration assets, especially if yields rise further and central banks continue tightening.”
Gold: closer to neutral
Invesco also diverges from our consensus on gold. While the Overweight on gold in our consensus has only strengthened further in recent months, Vig stays closer to Neutral: “Although there is some upside from current levels, I would be closer to Neutral on gold with some support from a weaker US dollar, but higher real yields tend to work against gold.”
Technology: the structural story holds, valuation is harder
Within his own Award category, the gap with the consensus becomes much clearer. Our sector consensus is very strongly Overweight on Technology — 78.6% Overweight versus 0% Underweight, the strongest signal in our entire dataset — while Invesco holds the sector at Neutral: a gap of nearly 79 percentage points.
That’s not because Vig rejects the AI story itself. “The Neutral view is predicated on my thinking that the structural growth story with the capital expenditure cycle is still intact, although I think that markets are still pricing in a faster pace of earnings growth than what is most likely, in my view,” he says. He points to a number of real constraints: data centre construction faces physical and regulatory hurdles even where demand exists; pricing still has some way to go before it catches up with the cost of compute, meaning either models need to become significantly more efficient or prices need to rise — which could in turn dampen demand; and financing the build-out through debt issuance could eventually run into higher interest rates as a constraint.
So the difference with the consensus isn’t about AI or no AI, but about the price investors are already paying for it.
Utilities: same theme, different valuation
On Utilities, Invesco is actually close to our consensus. “I think they could be boosted by the structural growth story with the data centre build-out and tended to have a positive correlation with energy prices, so there are a couple of tailwinds,” Vig says. He does see a clear counterforce: “rising yields could put pressure on the sector both as it being a ‘bond proxy’ and as a highly leveraged sector where interest costs may rise.” Even so, he adds, the sector could act as a diversifier in this environment — both against rising energy prices and a potential slowdown in the global economy.
Beyond that, Vig sees potential mostly in late-cyclicals: “industrials and basic resources that tended to outperform in the mature phase of market expansions,” alongside financials, which “also look attractive with relative valuations not stretched and as long as interest rates stay high, consumer loan demand and spending remain resilient, and the investment banking cycle stays strong.” He is more cautious on consumer discretionary, where “rising inflation may reduce spending power through lower real wage growth,” and on telecoms, which he sees as having already benefited from AI-driven demand and now facing more risk.
Energy: a bet on persistent Gulf tension
On Energy, Invesco is Overweight, against a consensus that stands slightly Underweight — and this time with an explicit rationale that connects directly to the geopolitical theme this article opens with: “My Overweight assumes that the US-Iran conflict remains unresolved and the Strait of Hormuz stays only partially open. There remains a risk of flare-ups and attacks on infrastructure that could constrain Gulf oil producers’ ability to supply customers. The destruction of infrastructure in Russia also increases margins for refiners.”
Two separate drivers, then: persistent supply risk via the Gulf, and higher refining margins from the loss of Russian capacity. Both amount to the same thing — a positioning that assumes the current tension isn’t a temporary phenomenon, but the new normal.
ING Investment Office: the US and Japan diverge, on EM ING sides with the consensus
ING Investment Office, winner of the Equity Regional Award, responds through Bob Homan (Global Chief Investment Officer) and Simon Wiersma (Investment Manager, Chief Investment Strategist). They recognize much of the macro picture: the combination of heavy AI investment, higher energy prices, and less accommodative monetary policy does, in their view, form an important market dynamic, and higher energy prices can make inflation more persistent, limiting room for rate cuts.
Resilient earnings, despite the geopolitics
Still, ING warns against focusing too one-sidedly on geopolitical risks: “At the same time, we think it’s important not to look exclusively at geopolitical risks. The past few quarters have shown that equity markets remain remarkably resilient as long as earnings growth stays strong.” AI plays an important role in that, according to ING, not just within Technology but just as much via industrials, utilities, and infrastructure.
Carry over duration, and a different view on gold
Within bonds, ING stays cautious on duration: “Carry remains a more important source of income for investors than duration.” Investment-grade corporate bonds, High Yield, and Emerging Markets Debt currently offer a more attractive risk-return profile than government bonds, in the bank’s view, though rising real yields are gradually making government bonds more interesting again too.
On gold, ING is closer to our consensus than Invesco. Demand, in ING’s view, is driven not only by geopolitical uncertainty but also by central bank buying, fiscal deficits, and reserve diversification, which is why the bank sees gold mainly as “an effective diversifier within a portfolio, rather than as a direct competitor to equities.” Their scenario is therefore not a classic risk-off environment, but rather a period in which higher rates persist for longer while earnings growth stays strong enough to support equities.
The US: positive, but not Overweight
Within the Equity Regional Award, the gap with the consensus becomes concrete. ING positions North America at Neutral, against a consensus of 72 asset managers that stands net 51.6 percentage points Overweight there (56.5% Overweight versus 4.8% Underweight), the strongest regional preference in our entire dataset.
“The neutral position in US equities was, and is, not a negative view on the US. Quite the opposite,” ING emphasizes. The US market benefits strongly from AI, innovation, and earnings growth, in the bank’s view; the caution lies mainly in valuation. A lot of good news is already in the price, and a higher long-term rate makes it harder to justify further multiple expansion, a richer valuation per unit of earnings.
Japan: more positive, but not yet Overweight
On Japan, ING has actually grown more constructive in recent months: the position moved from Underweight to Neutral, supported by improving earnings and Japan’s growing role in the global AI supply chain, from robotics to semiconductor equipment. Still, the bank remains more cautious than our consensus, which stands net 21.7 percentage points Overweight on Japan, it’s mainly the risk of a much stronger yen that keeps ING from raising the position further.
Emerging Markets: strong conviction, but not a contrarian call
Emerging Markets remain ING’s most important regional Overweight, supported by earnings growth and valuations that are more attractive than in many developed markets. AI plays a role here too: Taiwan, South Korea, and parts of China are indispensable links in the global semiconductor chain, and the region also offers diversification away from the heavily concentrated US technology sector.
What makes that conviction interesting is that it’s hardly contrarian at all: our own consensus is itself already just as strongly Overweight on Emerging Markets, at a net 61.5 percentage points. So the real difference between ING and the rest of the market lies far less in Emerging Markets than in the US and Japan.
What could upend this picture?
The risks the three flag themselves diverge too. For Invesco, it’s mainly a financing bottleneck: if long rates stay high while both governments and companies need more capital, that becomes a problem, and, notably, the same firm, through its Energy position, is also the one positioned most firmly for persistent geopolitical tension. For ING, a much stronger yen could undermine the appeal of Japanese equities. And Federated Hermes looks further out, to a risk that still seems distant today: that the AI infrastructure build-out overheats on the way to 2028 and causes a setback afterward.
Consensus is the starting point, not the portfolio
What stands out most is that none of these three Award winners simply contradicts the consensus. At the macro level, they recognize largely the same regime, higher rates, resilient equity markets, an ever-broadening AI investment cycle. The difference only emerges in the next step: the translation into actual positions.
And that’s exactly where asset allocation gets genuinely interesting: in the question of where you then actually take risk, and where you deliberately choose not to, not in simply recognizing the dominant theme.
Our thanks to ING Investment Office, Invesco, and Federated Hermes for their time and openness. All three won their category at the eleventh edition of the Asset Allocation Awards, held this past February. We’re now well past the halfway point of the new cycle: nominees for the twelfth edition will be announced in November, with the awards themselves taking place on Thursday, 28 January 2027, in Amsterdam.