Latest asset allocation views

_{June 2026}

Manulife Investment Management's Multi-Asset Solutions Team is the multimanager and strategic asset allocator behind the John Hancock target-date funds and model portfolios. Every quarter, the team compiles a 5-year and long-term (20-year-plus) analysis of expected asset class returns. This analysis covers all asset classes globally that the team analyzes on a regular basis although not all asset classes are represented within all strategies managed by the team.

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Asset allocation views: positioning in an uneven environment

Central bank policy shifts and geopolitics are shaping markets—yet tailwinds outpace headwinds

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Key global themes

Examining an evolving market: aligning with policy shifts, tailwinds, and structural change

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Central banks turned hawkish—is another reset likely?

The conflict in the Middle East has had a profound impact on central bank policy. Central banks have gone from largely settling into neutral policy rates (i.e., rates that neither stimulate nor weigh on the economy) to being more hawkish as they contend with the conflict’s effects on key commodities.
With peak disruptions seemingly behind us, we could be approaching another reset in policy paths as central banks reassess the extent to which energy price disruptions will have meaningfully altered countries’ inflation paths.
Incoming U.S. Federal Reserve (the Fed) chair Kevin Warsh has quickly made his mark, with shorter communications, an announced review of key processes at the Fed, and the removal of forward guidance. All told, these developments likely indicate greater market volatility.

Headwinds persist, but tailwinds dominate

Headline risks remain elevated, including persistent inflation, geopolitical uncertainty, extended valuations, rising government deficits, and an unclear monetary path. Despite these concerns, equity markets have continued to absorb the noise and push through near term uncertainty.
Markets remain supported by strong underlying fundamentals, including steady growth, resilient earnings, a firm labor market, improving industrial activity, and a healthy consumer, alongside fiscal support and accelerating capex tied to the ongoing AI buildout.
Absent a clear shift in fundamentals, we remain constructive on equities. However, risks and opportunities aren't evenly distributed across markets. Opportunities extend beyond crowded trades, making diversification and active management critical to capturing them effectively.

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Geopolitical fragmentation: a persistent market reality now

The Middle East conflict has dominated headlines and market conversations in the second quarter. As of this writing, a framework agreement to end hostilities has eased a key market overhang, pushing oil prices lower and lifting equities in the near term.
While the recent conflict may be reaching an end, it adds to a list of macroeconomic shocks that have been a defining feature of markets over the past five years, from COVID-19 and the ensuing supply chain disruptions to the Russia–Ukraine war and expanding U.S. tariffs.
As the world continues to resynchronize toward deglobalization, geopolitical uncertainty is likely to persist as a structural market feature, elevating volatility without necessarily derailing growth. Notably, markets have shown a pattern of quickly looking through these shocks after the initial reaction, refocusing on corporate earnings and forward expectations. This reinforces the importance of resilient, well-diversified portfolios rather than attempts to time macro events.

^{Source: Manulife Investment Management, June 30, 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 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 remain neutral on U.S. equities, supported by solid earnings and capital expenditures funding the AI infrastructure buildout. Headwinds remain in the form of market concentration, increased inflation, and uncertainty surrounding the Middle East conflict .
We remain overweight Canadian equities, driven by the underlying sector makeup of their economy, with tailwinds supporting cyclical sectors including materials, industrials, and energy.
Emerging market equities remain overweight, supported by the ongoing semiconductor upcycle, which is unlikely to peak this year given the global expansion of AI infrastructure. Global energy and food prices remain a key risk to the broader region.

As of June 30, 2026, Manulife Investment Management’s Multi-Asset Solutions Team remains neutral on U.S. equities and overweight in Canada and emerging market equities. The team remains neutral on developed international markets ex-North America. — Source: Multi-Asset Solutions Team, Manulife Investment Management, as of June 30, 2026.

Regional/sector-specific equity

We’ve moved overweight U.S. small and mid-cap (SMID) equities, driven by technical support, favorable valuations versus both large cap equities and their own historical valuations, and improving earnings growth. SMID caps also provide diversification and exposure to areas of the market that look attractive outside of large cap technology.
We remain overweight Japan equities, supported by improving macro momentum with positive real GDP and wage growth, strong corporate earnings, and favorable foreign investor participation.
We remain overweight Asia-Pacific ex-Japan equities, focusing on select opportunities in markets benefiting from resilient regional growth and AI-linked supply-chain demand, e.g., Taiwan, South Korea. The prolonged conflict in the Middle East has exerted inflationary pressure on commodity importers in the region.
We remain underweight REITs given ongoing pressure from higher interest rates, relatively muted earnings growth, and sector-specific fundamental challenges. However, there's an opportunity for improvement as valuations adjust to these known headwinds.
We remain overweight commodities, with a preference for base metals such as aluminum and copper, supported by strong demand from the AI infrastructure buildout. Oil also remains supported by geopolitically driven supply constraints and resilient global economic growth.

Taking a regional and sector-specific view, as of June 30, 2026, Manulife Investment Management’s Multi-Asset Solutions Team moved overweight in U.S. small and mid-cap equities and remains neutral in U.K., Europe ex-U.K., Emerging Latin America, Mainland China, and Hong Kong equities. The team remains underweight Real Estate Investment Trusts and overweight Asia-Pacific ex-Japan equities, commodities, and infrastructure. — Source: Multi-Asset Solutions Team, Manulife Investment Management, as of June 30, 2026. Arrow indicates a view change since the prior period.

Fixed income

We remain underweight U.S. investment grade overall, driven primarily by tight spreads. From a duration perspective, we continue to favor short and intermediate opportunities in the United States.
We’ve moved neutral on Canadian investment grade as strong investor demand continues to absorb new supply, and Canada maintains a healthier fiscal position than peers. Additionally, the asset class could benefit from a market overpricing of future rate hikes.
While we remain neutral on U.S. high yield, we continue to favor the asset class relative to leveraged loans as the high yield market remains more insulated from AI-related software risk, the index remains higher quality, and has shown less sensitivity to rate volatility.
We remain overweight Asia high yield given more attractive relative value and stronger risk-adjusted return potential versus investment grade. Our view is supported by higher all-in yields and shorter duration profiles, alongside resilient regional fundamentals and ongoing policy support in key markets.
We remain neutral on convertible bonds, but cautious as the convertibles market is trading with an equity-heavy profile, with many issues close to converting, thereby reducing the typical bond floor diversification benefit. At the same time, performance and composition are increasingly concentrated in technology.

Private markets

We remain neutral on commercial real estate across the United States, Europe, and Canada. Fundamentals are improving as valuations stabilize and capital flows increase. Near-term returns are expected to be mostly income driven rather than capital appreciation, except in select growth areas such as data centers. As the CRE market recovers, we're closely monitoring downside risks tied to higher-for-longer rates and refinancing stress.
We remain overweight infrastructure, as AI is driving a large buildout of electricity, digital networks, and physical assets, supporting a potential multidecade investment cycle.
Private credit remains compelling. While risks are elevated in certain subsectors, overall fundamentals are stable, and performance is driven by manager selection and underwriting. The opportunity set is expanding beyond direct lending, with more focus on asset-based finance as assets move off bank balance sheets.
We’re underweight private equity due to high entry valuations, higher financing costs, and wider bid/ask spreads that continue to limit exits and extend holding periods. Returns are becoming more dependent on operational execution, which may lead to lower outcomes than in the past.

Asset class focus

Japan equities: structural tailwinds and AI-driven growth

Earnings momentum, reform, and AI exposure support a strong outlook

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Japanese corporate earnings continue to be revised upward, supported by recovering domestic demand, sustained wage growth, and strong corporate profitability. Improving business sentiment, as reflected in recent survey data, and Japan’s leveraged exposure to the global AI buildout further reinforce earnings momentum, despite modest direct index-level exposure.

While higher energy prices tied to the Middle East conflict have been a headwind, Japan’s growth outlook remains supported by fiscal policy, strong business investment, and improving corporate activity. Continued wage gains and a gradual path toward Bank of Japan policy normalization support the recovery, although a more hawkish stance could pose risks to earnings estimates.

Investor sentiment toward Japanese equities is improving, supported by renewed foreign inflows, moderating hedging activity, and broad-based market participation. This strengthening backdrop reflects growing confidence in the outlook and reinforces momentum behind the market’s recent gains.

Ongoing corporate governance reforms continue to support Japanese equities, driving improved shareholder alignment through reduced cross-shareholdings, fewer takeover defenses, increased M&A activity, and more disciplined capital allocation. These improvements are creating a sustained tailwind for earnings growth and valuation re-rating over time.

Japan: TANKAN Business Survey, large enterprises

The chart illustrates the business sentiment of manufacturing and nonmanufacturing large enterprises in Japan. — Source: BOJ, Macrobond, Manulife Investment Management, as of 6/30/2026

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 April 30, 2026. 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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Related viewpoints

June 22, 2026

2026 Global Macroeconomic Outlook: trying to move past the Middle East conflict

Alex Grassino, Global Chief Economist, Multi-Asset Solutions, Manulife Investment Management Manulife Investment Management

Dominique Lapointe, CFA, Senior Global Macro Strategist, Manulife Investment Management Manulife Investment Management

Yuting Shao, Senior Global Macro Strategist, Multi-Asset Solutions Team Manulife Investment Management

Hugo Bélanger, Senior Global Macro Analyst, Multi-Asset Solutions Team, Manulife Investment Management Manulife Investment Management

With the Middle East conflict's ripple effects still being felt, our macro strategy team, led by Global Chief Economist Alex Grassino, shares its latest forward-looking views on global economies and markets.

January 2, 2026

2026 fixed-income outlook: finding opportunity in uncertainty

Jeffrey N. Given, CFA, Head of Developed-Market Fixed Income, Senior Portfolio Manager, Co-Head of U.S. Core and Core-Plus Fixed Income Manulife Investment Management

Howard C. Greene, CFA, Senior Portfolio Manager, Co-Head of U.S. Core and Core-Plus Fixed Income Manulife Investment Management

Pranay Sonalkar, CFA, Portfolio Manager, U.S. Core and Core Plus Fixed Income Manulife Investment Management

Spencer Godfrey, CFA, Associate Portfolio Manager, U.S. Core and Core-Plus Fixed Income Manulife Investment Management

Connor Minnaar, CFA, Portfolio Manager, Core and Core-Plus Fixed Income, Manulife Investment Management Manulife Investment Management

After an unpredictable year for bond investors, we share our outlook on the yield curve and credit spreads, and discuss how an allocation to MBS could potentially enhance fixed-income portfolios.

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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Latest asset allocation views June 2026

Asset allocation views: positioning in an uneven environment

Key global themes

Central banks turned hawkish—is another reset likely?

Headwinds persist, but tailwinds dominate

Geopolitical fragmentation: a persistent market reality now

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 Japan equities: structural tailwinds and AI-driven growth

Japan: TANKAN Business Survey, large enterprises

Asset class returns

Expected returns

Multi-Asset Solutions Team

Related viewpoints

2026 Global Macroeconomic Outlook: trying to move past the Middle East conflict

2026 fixed-income outlook: finding opportunity in uncertainty

Latest asset allocation views

_{June 2026}

Asset class focus

Japan equities: structural tailwinds and AI-driven growth