Wilmington Trust's Meghan Shue says equities will outperform over the next 12 months

11/25/2025 1:10:38 PM	short term down	5 days later	+2.45%	-2.45%
11/14/2025 10:17:18 PM	medium term cautious down	21 days later	+0.94%	-0.47%

The host notes the Dow closed at an all-time high and questions why Wilmington Trust, known for conservative management, is now moving to a modest overweight in equities after being market weight through the rally.

Unnamed host

Meghan Shue

We were fully invested but sensitive to downside risks, especially the labor market. Private payrolls ex-healthcare were contracting in Q1, something never seen outside a recession. Now the labor market is re-accelerating and headline risk from the war is receding, so we think it's appropriate to be overweight. Equities will outperform fixed income over the next 12 months.

The first quarter showed concerning labor market weakness that made us cautious, but that risk has now faded.

The host asks what 'fully invested' means at Wilmington Trust and what 'modest overweight' entails in terms of allocation.

Unnamed host

Meghan Shue

Fully invested means a benchmark weight to equities, e.g., 70% equities for a 70/30 risk profile. A modest overweight means moving to about 73-74% equities. We've diversified across large cap, small cap, and emerging markets.

Small cap has done very well and we have a more dovish outlook on the Fed, expecting rate cuts this year due to disinflationary trends, not economic weakness. That dovish pivot should be very good for small caps and emerging markets.

The host asks if Wilmington Trust is focused on the Dow or ready to bet on the Magnificent Seven.

Unnamed host

Meghan Shue

Within large cap we split between growth and value with a slight overweight to growth. If the economy holds in and we get a dovish Fed, value should also have a good year. We want to be diversified. Parts of tech like memory and semiconductors have done well, but other parts like the Mag 7 have underperformed, so there is opportunity there.

The tech landscape is complicated; we don't want to put all chips in one basket.

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