Asset allocation
Within public equities, Costello and Gan believe that Asia ex Japan value-oriented strategies could add a layer of downside protection, given less demanding starting valuations and a differentiated sector exposure that is less concentrated in technology.

Across hedge funds, Costello and Gan think that Asia event-driven strategies warrant a second look, in view of an improved manager competitive landscape and a current macro environment that is supportive of alpha generation. Event-driven strategies also tend to be less correlated to broader equity markets, and therefore could serve as a diversifying strategy amid current market volatility.

Within private investments, they remain constructive on Japanese buyouts,given strong underlying supply and demand fundamentals. “Deal flow is likely to remain robust as Japan’s ageing demographics and ongoing corporate governance reforms continue to drive corporate actions,” they said. It may be further accelerated by dislocations created by US tariffs. Meanwhile, attractive entry valuations today and the availability of cheaper leverage lend support to continued capital inflows.

For real assets, Costello and Gan see increased opportunities in Asia-Pacific value-added and opportunistic infrastructure, bearing in mind the region’s maturing regulatory environment and longer-term demand for infrastructure spending. They are positive on data centres and renewable energy infrastructure, which are backed by strong fundamental demands while also less sensitive to potential growth and trade shocks.