^{Multi-Asset Solutions Team}

Latest asset allocation views

April 2026

Asset allocation views: resilient portfolios in uncertain markets

AI and global conflict are driving markets. Diversification remains key

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Key global themes

Three forces shaping markets today: How to navigate macro uncertainty, the AI build‑out, and a smarter take on diversification.

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Middle East conflict: energy risk and macro uncertainty

The only thing that’s clear about the conflict in the Middle East is that pinning down a neat timeline or clean forecast is impossible.
We’re currently assessing the conflict through three lenses: Time, infrastructure damage, and escalation. So far, the time portion has extended beyond what we would’ve assessed, and we’re starting to see the conflict’s impacts filter through to macro data like inflation. The full extent of infrastructure damage remains to be seen, but at the time of writing, it doesn’t appear to be irreversible, which is what’s allowing markets to continue treating the disruptions in the conflict as temporary.
We look at the conflict’s impact on growth and inflation more in terms of rank order than point estimate. To that end, North America is relatively well- sheltered, with Europe being slightly more affected. Emerging markets are being impacted more quickly and with greater intensity.
Central banks have positioned themselves accordingly, with North American institutions willing to wait for evidence of secondary effects on inflation; Europe is slightly more wary; the UK and emerging markets have taken the most hawkish turn.

AI: bubble or build-out?

AI isn’t acting like a classic bubble. The focus has shifted from hype to large‑scale investment in chips, data centers, and power systems, funded mainly by strong cash flow. Spending is still ahead of monetization and near‑term productivity, but the build‑out continues.
Market leadership has become more selective. Strength is concentrated in enablers such as semiconductors, memory, power equipment, grid upgrades, and cooling. Some software companies are lagging as monetization takes longer, deal cycles slow, and platform competition increases.
We remain positive but valuation aware. We focus on AI areas with clear earnings momentum and watch revenue scaling and power availability. With valuations elevated, earnings misses could trigger pullbacks, so we prefer disciplined position sizing and a balanced mix of quality growth, selective cyclicals, and value across equity markets.

Diversification isn’t dead; it’s different

The traditional idea that bonds reliably hedge equities can weaken when inflation or geopolitics dominate. Recent tensions in the Middle East have pushed energy prices higher and kept bond yields from easing, even as equities softened. This underscores the importance of portfolios that draw on multiple sources of return instead of relying on a single hedge.
Equity opportunities are broadening globally. In the United States, elevated valuations support a wider mix across styles and market caps to help reduce concentration risk. Elsewhere, Japan, Europe, and parts of emerging markets offer selective opportunities. Conflict in the Middle East have contributed to a pullback in non‑U.S. equities and temporary U.S. dollar strength, which may offer a chance to rebuild non‑U.S. exposure as conditions stabilize.
We also see value in diversifiers beyond traditional stocks and bonds. Allocations to precious metals, liquid alternatives, and diversified real‑asset exposures can help support portfolio resilience when correlations between equities and bonds weaken, and traditional hedges become less reliable.

^{Source: Manulife Investment Management, March 31, 2026. These views are updated on a quarterly basis. This commentary is provided for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. Diversification does not guarantee a profit or eliminate the risk of a loss. No forecasts are guaranteed.}

Active asset allocation views

Asset class overview

We remain modestly overweight equities, supported by robust earnings trends, steady global growth, and productivity‑driven investment themes such as AI. While valuations, inflation pressures, and broader geopolitical uncertainty present ongoing risks, the current macro backdrop still leans supportive of risk assets.
We continue to be underweight fixed income given upside inflation risks and rising fiscal pressures that leave long‑end yields vulnerable. We favor shorter duration, and note that tight credit spreads, particularly in investment grade, limit upside despite healthy corporate balance sheets.

Broad equity

We’ve downgraded U.S. equities to neutral, as elevated starting valuations limit upside despite resilient earnings and AI‑related investment and modest policy tailwinds. With risks skewed by sticky inflation and the potential for earnings or macro disappointments to trigger a tech-led pullback, we favor a barbell approach that balances quality growth with cyclical value.
We’ve upgraded Canada equities to overweight, supported by favorable commodity tailwinds and the rotation toward value and cyclical sectors such as materials and industrials that dominate the Canadian market. We acknowledge the risks from tariffs and trade uncertainty, which could lead to near-term fluctuations.
We’ve upgraded emerging markets to overweight, driven by improving growth, increasing AI-related investment flows, and attractive valuations relative to developed markets. Despite trade-related risks, stronger commodity prices provide an additional boost for key EM exporters.

As of December 31, 2025, Manulife Investment Management’s Multi-Asset Solutions Team remains overweight in U.S. equities and neutral on Canada and emerging markets. The team has moved to neutral on developed international markets ex-North America. — Source: Multi-Asset Solutions Team, Manulife Investment Management, as of March 31, 2026. NA refers to North America.

Regional/sector-specific equity

We’ve upgraded U.S. small- and mid-caps to neutral. Earnings recovery is broadening beyond mega-cap tech. Easing Fed policy and deregulation could help. While higher financing costs and economic sensitivity remain challenges, these equities offer selective cyclical opportunities—even with limited AI exposure.
We’ve moved Europe ex-U.K. to neutral. Fiscal stimulus and accommodative policy support a solid macro backdrop, but technical momentum has weakened and earnings lag the United States. We continue to favor Spain and Italy, especially banks and value-oriented sectors.
We remain neutral on Japan equities, though they’re trending up. Stronger consumption, exports, and corporate profitability support the outlook, while some policy uncertainty, currency volatility, and rate normalization temper near-term optimism.
We’ve moved overweight Asia-Pacific ex-Japanese equities, driven by Asia’s manufacturing recovery and the AI boom driving strength in Taiwan and South Korea.
We remain overweight commodities, favoring base metals like copper. We continue to favor gold as a long-term diversifier, while remaining cautious on oil due to expected supply buildup.

Taking a regional and sector-specific view, as of March 31, 2026. Manulife Investment Management’s Multi-Asset Solutions Team is neutral on U.S. small and mid-cap, U.K., Europe ex-U.K., Japanese, Emerging Latin America, Mainland China, Hong Kong and Infrastructure equities. The team is underweight Real Estate Investment Trusts and overweight Asia-Pacific ex-Japan equities and commodities. — Source: Multi-Asset Solutions Team, Manulife Investment Management, as of March 31, 2026. 1. Public markets only.

Fixed income

We’ve moved underweight U.S. investment grade overall. From a duration perspective, we continue to favor short and intermediate opportunities in the United States, as longer-term assets haven’t provided portfolio defense amidst recent geopolitical turmoil, driven by oil-driven inflation concerns. Additionally, we expect longer-term structural headwinds to pressure long-end yields higher.
We remain neutral on U.S. high yield driven by a positive macroeconomic backdrop. However, we expect limited upside from further spread tightening.
Within Asia, we continue to prefer high-yield over investment-grade credits, as the higher all‑in yields offer a more attractive cushion against market uncertainties. They also tend to be driven by company‑specific fundamentals, making them less sensitive to broad macro headwinds.
We remain overweight EM debt, though our preference is for local currency-denominated debt driven by an expectation of continued U.S. dollar weakening.
We maintain a neutral view on convertible bonds as stable credit fundamentals and above-average implied equity volatility are offset by ongoing geopolitical risks and inflationary pressures. The asset class’s concentration in higher-growth sectors, such as technology, represents both a risk and a potential driver of upside.

Source: Multi-Asset Solutions Team, Manulife Investment Management, as of March 31, 2026. 2. No previous outlook for this sub-asset class.

Private markets

We remain optimistic about global infrastructure as strong secular trends, including digitization and decarbonization, require significant amounts of long-term capital investment and showcase resilience through market cycles.
Private credit remains a compelling asset class. While there are elevated risks in select subsectors, fundamentals are largely stable. Softened demand from recent headlines has led spreads to tick higher for new loans, favoring lenders. All-in yields remain in the high single digit, low double-digit range.
We’re underweight private equity due to elevated valuations, extended holding periods, tighter exit conditions, and diminished benefits from leverage. The industry’s scale and slower turnover challenge its ability to sustain historical return assumptions.

Asset class focus

Broadening diversification amid an evolving market environment

As stock-bond correlations rise, a wider toolkit can help investors navigate a shifting macro landscape

Equity and bond correlations have trended higher as inflation persists, long-term yields remain elevated, and structural forces such as deglobalization, geopolitical tensions, fiscal expansion, and tariff policies exert pressure. This shift reduces the reliability of traditional diversification and heightens the need for broader sources of portfolio resilience.

Commodities can offer meaningful diversification, supported by structural strengths in both precious and base metals. Gold benefits from central bank and investors’ diversification demand, along with supportive currency and policy dynamics. Copper and aluminum should see long-term support from constrained supply, rising strategic importance, and demand tied to electrification, data centers, and industrial substitution. Oil, while structurally challenged, presents a tactical opportunity so long as disruptions in the Strait of Hormuz continue to restrict global flows.

Alternatively, a more diversified mix of real assets, spanning real‑asset‑linked equities, inflation‑linked bonds, and commodities, can help investors weather structurally higher inflation, supply disruptions, and geopolitical fragmentation. Chronic underinvestment and rising long‑term demand from AI, electrification, and the energy transition further reinforce the case for these assets, which can also provide low correlations and durable income.

Liquid alternatives, including long‑short equity, market-neutral, managed futures, and absolute return strategies, can complement equities and bonds by relying less on market direction and more on alpha, trend, and volatility dynamics. These strategies can help manage interest‑rate and equity‑market risk, improve drawdown resilience, and provide a smoother path of returns during periods of heightened uncertainty.

U.S. stock-bond correlation

The chart illustrates the correlation between U.S. stocks and bonds growing in times of high inflation. — Source: Bloomberg, Macrobond, Manulife Investment Management, as of March 19, 2026. Shaded areas denote U.S recessions. Stocks are represented by the S&P500 Total Return Index. Bonds are represented by the Bloomberg U.S. Treasury Total Return Index.

Asset class returns

Asset class returns comprise the Multi-Asset Solutions Team’s expectations of how different asset classes may perform over a 5-year and long-term (20-year-plus) time horizon.

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Expected returns

^{Source: Multi-Asset Solutions Team, Manulife Investment Management, as of December 31, 2025. Not all asset classes with forecasts are represented in every portfolio managed by the Multi-Asset Solutions Team. Data shown in the tables reflects the most recent data available. Asset class forecasts comprise inputs driven by proprietary Manulife Investment Management research and are not meant as predictions for any particular index, mutual fund, or investment vehicle. To initiate the investment process, the investment team formulates 5-year and 20-year-plus risk/return expectations, developed through a variety of quantitative modeling techniques and complemented with qualitative and fundamental insight. Assumptions are then adjusted for a number of factors. REITs refer to real estate investment trusts. USD, CAD, and CNY refer to the U.S. dollar, the Canadian dollar, and the Chinese yuan, respectively. This chart contains forecasts reflecting potential future events and is only as current as of the date indicated. There is no assurance that such events will occur, and the actual asset class return may be significantly different from that shown here. This material should not be viewed as a recommendation or a solicitation of an offer to buy or sell any investment products or to adopt any investment strategy. It is not possible to invest directly in an index. Past performance does not guarantee future results. No forecasts are guaranteed.}

Multi-Asset Solutions Team

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Nathan W. Thooft, CFA

CIO, Multi-Asset Solutions Team, Global Equities

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Robert E. Sykes, CFA

Senior Portfolio Manager, Head of Asset Allocation, U.S., Multi-Asset Solutions Team

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James Robertson, CIM

Senior Portfolio Manager, Head of Multi-Asset Solutions, Canada, Head of Tactical Asset Allocation, Multi-Asset Solutions Team

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Luke Browne

Senior Portfolio Manager, Global Head, Multi-Asset Solutions Team, Head of Multi-Asset Solutions, Asia

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Geoffrey Kelley, CFA

Senior Portfolio Manager, Global Head, Systematic Equity Solutions, Multi-Asset Solutions Team

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Benjamin W. Forssell, CFA

Client Portfolio Manager, Global Multi-Asset, Multi-Asset Solutions Team

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Eric Menzer, CFA, CAIA, AIF

Head of Advisory Solutions, Senior Portfolio Manager, Multi-Asset Solutions Team

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Important disclosures

Investing involves risks, including the potential loss of principal. Financial markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. The information provided does not take into account the suitability, investment objectives, financial situation, or particular needs of any specific person.

All overviews and commentary are intended to be general in nature and for current interest. While helpful, these overviews are no substitute for professional tax, investment or legal advice. Clients and prospects should seek professional advice for their particular situation. Neither Manulife Wealth and Asset Management, nor any of its affiliates or representatives (collectively “Manulife WAM”) is providing tax, investment or legal advice.

This material is intended for the exclusive use of recipients in jurisdictions who are allowed to receive the material under their applicable law. The opinions expressed are those of the author(s) and are subject to change without notice. Our investment teams may hold different views and make different investment decisions. These opinions may not necessarily reflect the views of Manulife WAM. The information and/or analysis contained in this material has been compiled or arrived at from sources believed to be reliable, but Manulife WAM does not make any representation as to their accuracy, correctness, usefulness, or completeness and does not accept liability for any loss arising from the use of the information and/or analysis contained. The information in this material may contain projections or other forward-looking statements regarding future events, targets, management discipline, or other expectations, and is only current as of the date indicated. The information in this document, including statements concerning financial market trends, are based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. Manulife WAM disclaims any responsibility to update such information.

Manulife WAM shall not assume any liability or responsibility for any direct or indirect loss or damage or any other consequence of any person acting or not acting in reliance on the information contained here. This material was prepared solely for informational purposes, does not constitute a recommendation, professional advice, an offer or an invitation by or on behalf of Manulife WAM to any person to buy or sell any security or adopt any investment approach, and is no indication of trading intent in any fund or account managed by Manulife WAM. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Diversification or asset allocation doesn’t guarantee a profit or protect against the risk of loss in any market. Unless otherwise specified, all data is sourced from Manulife WAM. Past performance does not guarantee future results.

This material has not been reviewed by, and is not registered with, any securities or other regulatory authority, and may, where appropriate, be distributed by Manulife WAM and its subsidiaries and affiliates. Manulife WAM is the global investment, financial advice, and retirement plan services segment of Manulife Financial Corporation.

© 2026 by Manulife Wealth and Asset Management. All rights reserved. The statements and opinions expressed in this article are those of the author. Manulife WAM cannot guarantee the accuracy or completeness of any statements or data.

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Multi-Asset Solutions Team Latest asset allocation views

Asset allocation views: resilient portfolios in uncertain markets

Key global themes

Middle East conflict: energy risk and macro uncertainty

AI: bubble or build-out?

Diversification isn’t dead; it’s different

Active asset allocation views

Asset class overview

Asset class overview

Broad equity

Broad equity

Regional/sector-specific equity

Regional/sector-specific equity

Fixed income

Fixed income

Private markets

Private markets

Asset class focus Broadening diversification amid an evolving market environment

U.S. stock-bond correlation

Asset class returns

Expected returns

Multi-Asset Solutions Team

Related viewpoints

2026 Global Macroeconomic Outlook: clearer picture, better growth

2026 fixed-income outlook: finding opportunity in uncertainty

^{Multi-Asset Solutions Team}

Latest asset allocation views

Asset class focus

Broadening diversification amid an evolving market environment