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Matt Clark

Market Outlook

ACWI ex-US Outlook

Outlook
12 October 2025

By

Portfolio Manager, TT ACWI ex-US Strategy; Co-Portfolio Manager, TT Global Smid-Cap Strategy

Latest ACWI ex-US economic and market outlook. 

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Although there are multiple risks including tariffs, geopolitical tensions and fiscal pressure, on balance we remain positive for a number of reasons. Consumers, particularly across Europe and the US, have significantly delevered since the Global Financial Crisis and are benefiting from low oil prices. Moreover, saving rates are currently very high in the EU and UK. We believe they can fall as rates are cut and consumer confidence recovers. The weaker dollar also effectively loosens monetary conditions globally, particularly in Asia and other Emerging Markets, where central banks can run monetary policy more in line with domestic conditions, without the need to protect their currencies. Finally, earnings delivery is strong, with the Global Earnings Revision Ratio near a four-year high.

Whilst valuations are not cheap on a global basis, neither are they extremely expensive, particularly in Asia, Emerging Markets, and to a certain extent, Europe. As investors we need to consider upside risks as well as those to the downside. Indeed, many of the conditions necessary for further strong market performance are present, including a global economy that is already generating growth, the start of an easing cycle from central banks, and exciting structural growth opportunities such as AI.

The portfolio retains exposure to a number of exciting themes. One example is Wellness. There is a general consumer trend towards healthier lifestyles, with people becoming more conscious of what they are eating and drinking. This is driving accelerating trends towards high-protein snacks, boosted further by the increasing use of GLP-1 drugs, which can lead to muscle wastage that can be offset by the consumption of more protein. We own Glanbia and Kerry, the former of which has a leading position in the protein powder segment. Both companies provide ingredients that enhance the protein and vitamin content of food and allow OEMs to reduce the salt, sugar and fat in food without degrading the taste and texture.

Another exciting theme is Wealth Management. Many operators in the space are high-quality, asset-light businesses with sticky customer bases and a high proportion of recurring revenues. They are also beneficiaries of rapid wealth creation in Asia and high savings rates in Europe and the UK. Moreover, wealth managers benefit from rising markets, which we have seen recently, and which on balance we expect to continue. We also own Integrafin and Allfunds, which play into the theme by providing platforms used by the wealth management industry.

Meanwhile, we remain excited about AI and are playing this in a number of ways. Our AI Data Centre hardware plays have been key winners for the fund, driven by a major spending cycle from the hyperscalers. Whilst we have taken some profit in these names after a strong run, we remain bullish and retain substantial exposure. Oracle recently announced an order from OpenAI worth $300bn over 5 years for data centre capacity. We see this as a watershed moment, and further confirmation of the ongoing AI arms race. It will likely lead to others increasing their spending to avoid being left behind. We have also been adding to companies that stand to benefit from implementing AI to enhance their own business models. One example is Japan-based Bengo4.com, which offers services to find lawyers, as well as a huge library of case precedents and associated documents that are used by lawyers themselves. It has recently launched an AI search engine for this database, which should make it significantly more valuable to customers and commands a substantial premium to standard services. Finally, we have been adding to high-quality companies that have sold off heavily on investor fears over AI competition. These positions are largely information services companies that could be categorised as bond-like ‘defensive growth’ equities. With the US continuing to cut rates and inflation gradually falling in much of the world, we expect bond markets to be firmer, supporting these stocks.

Important Information:
Nothing in this document constitutes or should be treated as investment advice or an offer to buy or sell any security or other investment. TT is authorised and regulated in the United Kingdom by the Financial Conduct Authority (FCA).

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