Global Asset Allocation Perspectives
October 2025
To help guide the positioning of Scotia Portfolio Solutions, the Multi-Asset Management Team of Scotia Global Asset Management meets regularly to discuss and debate the current macro environment and what it means for portfolio positioning. The following report captures the team’s current views.
Key macroeconomic themes
Global economic themes that are most likely to influence our views on portfolio asset allocation over the next 12-to-18 months.
Outlook for economic growth continues to improve
Economic growth has exceeded expectations, with the U.S. and Eurozone being noteworthy. Looking ahead, we expect ongoing modest growth with accommodative policy and strong corporate earnings and investment providing support.
Central banks face a challenging environment
Central banks continue to ease interest rate policy. However, stubborn inflation, particularly in the U.S., remains a key consideration as the inflationary impact of tariffs is expected to be felt more severely later in the year.
Overall, risks continue to ease but remain
Geopolitical risks have eased for now but remain. The risk of recession has also receded. The increasing stock market concentration in mega-cap companies is a growing risk and is a key consideration we continue to evaluate closely.
Asset allocation perspectives
Equities
We continue to hold a positive view on equities relative to fixed income and cash. The environment remains supportive of risk-on assets like stocks (resilient global economy adapting to trade dynamics, ongoing accommodative policy, improving economic indicators and room for Central banks to cut rates further) despite pockets of risk mentioned above.
Market concentration is increasingly concerning, but there are signs that innovation at mega cap companies is supporting a broad range of other businesses.
Fixed income
Given the recent appreciation of bond prices and the higher coupon income that can be earned now, our outlook remains positive for the next 12-to-18 months across global fixed income markets.
With that said, we still believe equities offer greater upside potential relative to fixed income. As previously mentioned, the environment is supportive of risk-on assets as inflation, while sticky, has peaked, global fiscal policy remains stimulative and global monetary policy continues to ease.
Canada
We continue to have a neutral view on Canadian equities. While the Bank of Canada has provided considerable easing, it’s likely we are at or near the end of the current easing cycle. Canadian equities have materially outperformed most other markets as precious metals, namely gold, and banks have generated outsized returns. However, continued outperformance is difficult to forecast.
U.S.
We continue to have a neutral view on U.S. equities. While the pace of policy changes has slowed, uncertainty remains, making it a difficult environment for businesses to operate. Enthusiasm for U.S. mega cap companies has driven valuations to potentially concerning levels, further concentrating the S&P 500 Index into a tech-focused growth index.
International
We continue to have a neutral view on international equities overall. U.S. trade uncertainty, although less extreme now, remains a risk to trade-dependent markets. This is offset by compelling valuations and increased fiscal stimulus. Many European and Asian currencies are also undervalued versus the U.S. dollar offering another potential opportunity.
Emerging Markets
We continue to have a neutral view on emerging market (EM) equities overall. Many EM economies remain sensitive to U.S. trade policy changes, which have often targeted countries most dependant on U.S. trade. Debt servicing burdens have fallen for many EM firms with the weaker U.S. dollar. While momentum remains positive, shifts in sentiment can be abrupt and unpredictable.
For further information, download the full Global Asset Allocation Perspectives Report.
As of September 30, 2025.
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