WealthSelect Managed Passive monthly commentary - Review of October 2026

October was a useful reminder that market leadership can change quickly. Concerns around the scale of investment in AI and the returns that companies will ultimately generate led to renewed volatility in technology stocks. While economic growth and corporate earnings remain supportive, the recent rotation highlights the importance of maintaining diversified portfolios rather than relying too heavily on the areas that have led markets in recent years.

Inflation risks remain

Inflation remains an important risk. Resilient economic growth and elevated energy prices could keep inflation higher for longer, limiting how far central banks can reduce interest rates. While government bonds provided useful diversification during October, we remain mindful they may be vulnerable if inflation or interest-rate expectations rise again.

Looking beyond the economic data

There is also plenty for markets to navigate outside the economic data. The ongoing conflict in the Middle East continues to create uncertainty around energy prices, while the UK Budget proved relatively uneventful for markets. Attention is also turning to the US and what the outcome of the midterm elections could mean for the policy backdrop and balance of power in Washington.

The importance of diversification

As recent months have shown, market narratives can shift quickly. With uncertainty around inflation, interest rates, and geopolitics likely to remain, we continue to believe diversification across regions, asset classes, and investment styles will be important. Maintaining that flexibility should leave the portfolios well placed to navigate changing market conditions and take advantage of any opportunities as they emerge.