Written by:
Alex Chappell
Head of Investments at Amber River DB Wood
The month of May was another example of outperformance from the tech sector.
For a large part of the last two decades, US technology has been the leading investment sector. The world’s largest businesses; Microsoft, Amazon, Google etc; were the biggest beneficiaries of the internet revolution, and as such their share prices followed their superior growth trajectories.
For a brief spell in 2022-2023, when inflation spiked and interest rates increased, the story changed in favour of other areas such as energy and defence, that were benefactors of rising costs and increased demand. Since then, Artificial intelligence (AI) has taken centre stage, and once again the dominance of the tech sector has continued.
The month of May was another example of outperformance from the tech sector. It was sharper and broader than we have seen in other previous waves, with gains not only seen in the US but across European and emerging markets as well. The UK stock market was the laggard producing less than 0.75% growth versus a 6% return in the main US index.
From a portfolio perspective, our asset allocation has been a key driver of the returns in May. In part, this reflects some positive decisions made in October 2025, when we added allocations to US markets, at a time when US technology stocks, in particular, were underperforming. Even the lower risk portfolios which have less equity exposure have felt the benefit.
From Low risk to High risk, our portfolios all sit ahead of their year-to-date targets.
In addition, although we have not yet reached a deal between the US and Iran, markets have continued to have an optimistic outlook, given policy maker’s commentary. In fact, it is hard to remember a time where the news flow from the political media was so negative on the prospects for a good outcome, but equity markets so positive. One will be proven right in time of course, but for now, oil markets have cooled, with Brent Crude as an example down to $98 at the time of writing, from $103 a month ago, and bond markets have also settled down a bit. With respect to the latter, we haven’t seen yields fall as yet, but they have stabilised for now. Bond investors continue to take a more cautious view than their equity counterparts. Income levels are high, and this adds resilience and opportunity to our portfolios, particularly at the lower end of our risk range.
Overall, May was a positive month for the portfolios, with returns between 1.12% (Very Low Risk) and 6.26% (Passive High Risk). From Low risk to High risk, our portfolios all sit ahead of their year-to-date targets.
Looking ahead the market environment remains very dependent on the outcome in Iran. Our base case continues to be that a deal is agreed that opens the Straits in weeks not months. If that doesn’t materialise, then we would expect the current market momentum to cool, as the risks to inflation and growth build. In addition to that we also have our AI friend, who is looking increasingly like he’s sat in a bubble.
Our inclination is to start to take profits from some positions into June, the negative of this would be that to do so would detract from positive returns if the Straits subsequently reopened, though equally our role is to protect clients’ money as a first priority before growing it.
This does not mean that we think the near term is negative, there are just so many factors to consider and sometimes it’s best to let a little air out and relieve the pressure. Anyway, a great month, though the outlook remains volatile.
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