Best ideas across asset classes

Section 5: Best ideas across asset classes

• Equities
• Fixed income
• Real estate
• Infrastructure and real assets

Equities

Willis Tsai

Best ideas

• We suggest a barbell approach balancing growth-oriented U.S. tech/AI exposure with defensive positioning in dividend growers and listed infrastructure, both offering income and potentially lower volatility.

Investment positioning

Solid (if somewhat mixed) economic growth, slowly declining rates and positive earnings momentum continue supporting global equity markets. Valuations have been looking increasingly full, but investors have continued to look past that concern. On balance, we maintain a neutral stance and believe investors should focus on high-quality stocks and selection rather than the macroeconomic backdrop.

The AI boom remains powerful with long-term tailwinds, but increased scrutiny of megacap tech companies should help drive broader market leadership. We think value and cyclical strategies are positioned to benefit most from this trend.

We continue to favor U.S. large cap stocks over small caps and other developed markets, supported by a dovish Fed and growth-friendly tax and regulatory policy. While emerging markets have rallied recently, we remain cautious given trade policy and geopolitical vulnerabilities.

We also remain positive toward equity markets, as discussed as part of our portfolio construction themes.

Fixed income

Anders Persson

Best ideas

• Preferred securities should benefit from strong fundamentals and limited new issuance. Senior loans offer attractive yields and value.
• For municipal bonds, we favor select opportunities in health care and higher education and believe the 14-to-17 year duration range offers value.

Investment positioning

We remain constructive on global bond markets. Despite tight credit spreads in some areas, yields are attractive, fundamentals strong and investor demand high. As has been the case for some time, we think it makes sense for investors to exercise broad diversification and take advantage of the nimbleness and flexibility offered by active management.

U.S. Treasuries offer poor relative value. We expect long term rates to remain range-bound even as short-term rates decline. We advocate maintaining neutral duration and focusing on credit opportunities.

Investment grade credit faces potential headwinds from tight credit spreads and extended duration. In contrast, areas such as senior loans and CLOs offer interesting opportunities given relatively high yields and sector dislocations. Emerging markets debt, especially corporates, also appears compelling, while high yield fundamentals remain solid with favorable long-term prospects. We are upgrading preferred securities, which offer a compelling combination of attractive yields, solid credit quality and decent liquidity. We remain constructive toward securitized assets on a long-term basis, but recent performance has been very strong, and spreads now offer fair value.

Municipal bonds rank among our top preferences. Strong fundamentals support improving prices and attractive relative value. The upward-sloping municipal yield curve offers compelling yields for those who are looking to extend duration.

We are carefully monitoring private credit markets for signs of stress but continue to see opportunities. Recent negative headlines and ongoing isolated credit events underscore the importance of careful selectivity focused on deal structure and strong covenants.

Real estate

Chad Phillips

Best ideas

• Across both private and public real estate, our focus is on sectors with compelling supply/demand characteristics, such as light industrial, convenience oriented retail, senior housing and data centers.

Investment positioning

We are bullish on private real estate’s ongoing recovery. Price returns are strengthening across geographies and property types, driven initially by rising income returns and reduced supply. We anticipate capital appreciation gains as well over the coming quarters.

Among sectors, our favored areas include light industrial, convenience-oriented retail, health care and global housing. Light industrial features low vacancy rates and limited new supply given the difficulties associated with industrial zoning. Convenience oriented retail offers the benefits of high demand and occupancy for grocery-anchored centers, while health care (specifically medical office and senior housing) benefits from an aging population, particularly in the U.S. and Japan. And global housing provides the most critical of basic needs and enjoys long term tailwinds from robust demand.

Real estate debt remains attractive with wide spread premiums, though we increasingly favor equity as the recovery broadens.

Public REITs have rallied, with net asset values now near fair value. We think this is a stock-pickers’ market and our focus is on senior housing, health care, data centers and manufactured housing/RV resorts providing affordable housing options.

Infrastructure and real assets

Jessica Bailey

Best ideas

• In public markets, we are focused on electric utilities that are trading at a discount while delivering accelerating earnings growth. In private markets, we continue to focus on investments that align with climate and digital transformations, such as clean energy generation, energy storage and data centers.

Investment positioning

Infrastructure investments across public and private equity and debt markets continue to be an area of emphasis for Nuveen’s Global Investment Committee. Energy demand shows no signs of slowing, and infrastructure investments feature strong fundamentals, resiliency and inflation-hedging potential. Additionally, rising uncertainty and volatility across financial markets are driving increased demand for real assets more broadly.

Public infrastructure looks particularly compelling with attractive valuations, durable cash flows and the essential service/defensive characteristics of the underlying businesses. Opportunities include data center buildouts, gas-powered generation and utilities positioned to capitalize on secular growth. We are focused on regions experiencing the highest power demand growth while avoiding jurisdictions experiencing regulatory scrutiny.

On the private markets side, infrastructure opportunities span equity and debt, particularly assets benefiting from surging power demand and cloud computing expansion. We favor modern, efficient energy infrastructure over legacy assets, emphasizing data centers and sustainability-focused investments supporting environmental transitions. We also see select opportunities in energy storage, especially in European equity investments.

Farmland remains a compelling long-term allocation for differentiated returns potential and inflation hedging characteristics. However, row crop margins continue moderating, particularly in the U.S.