For our Q3 Investment Outlook for Advisors, I’m Riz Hussain, with two minutes on US equity opportunities for your clients.
Through most of 2026, AI- and energy-related firms have been driving the narrowly led US bull market, but we are just now starting to see a broadening of performance. Meanwhile, the Iran war, sticky inflation, and shifting interest rate expectations remain key considerations. With this evolving market backdrop in mind, here are three points to consider when speaking with clients about their US equity allocations.
First, is mega-cap concentration risk too pronounced in your clients’ portfolios? The AI boom continues to be a powerful growth driver, but overexposure to a narrow group of mega-cap technology leaders may be creating too much concentration risk for your clients. Consider helping clients maintain exposure to the AI theme while broadening into companies tied to the physical infrastructure behind the AI. This approach might reduce their overall concentration risk without abandoning one of the market’s strongest secular opportunities.
Second, are your clients’ portfolios now more overweight growth and market beta than intended? If so, consider shifting their US equity allocations toward a more disciplined core approach that includes companies demonstrating balance sheet strength, free cashflow, and ample debt surface coverage. We think that these factors may become increasingly important during the second half of this year, particularly given geopolitical tension, supply chain shifts, persistent global inflationary pressures, and the potential for US market leadership to continue to shift or broaden.
Third, if you’re looking for diversification opportunities when adjusting clients’ US equity allocations, consider Fundamental Index strategies. Fundamental Indexing emphasizes a firm’s economic footprint over its market capitalization, provides a dynamic value tilt, and can complement traditional market cap-weighted index strategies to potentially enhance overall portfolio diversification and risk-adjusted returns.
Lastly, keep in mind that Schwab offers a comprehensive range of solutions, including low-cost ETFs and mutual funds, separately managed accounts, alternative investments, and model portfolios for advisors.
And if you have any questions about how to position strategies into your clients’ portfolios, please reach out to us for a complimentary portfolio evaluation. Thanks for watching.
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Past performance is no guarantee of future results.
Investing involves risk, including loss of principal. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
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