Feb. 20 at 1:52 PM
Citi is adjusting its global asset allocation while maintaining its economists’ “Goldilocks” outlook. In its February 2026 House Views, strategist Dirk Willer said liquidity remains abundant and supportive of risk assets, though rising AI concerns justify keeping hedges in place.
To manage those risks, Citi remains underweight credit and overweight duration, arguing U.S. rates could hedge against a potential AI bubble burst or AI-driven labor market disruption. The bank also sees room for risk-parity portfolios to recover.
Citi stays overweight equities overall, shifting half of its U.S. allocation into small caps to reduce concentration in mega-cap tech. It remains overweight U.S. and Japanese stocks, cuts China, and halves its underweight in the U.K.
Sector-wise, Citi is rotating away from mega-cap growth, downgrading technology to neutral and consumer discretionary to underweight, while upgrading industrials to overweight and moving materials to neutral.
$C