Hou Wey Fook

Stay anchored and stay structured.

That’s the advice of DBS chief investment officer Hou Wey Fook to investors as they navigate a world increasingly defined by geopolitical shocks, inflationary pressures, and US policy uncertainties.

Speaking at the bank’s second-half 2025 outlook briefing, Hou calls for a resilient strategy and warns against reactive behaviour.

“Time in the market beats timing the market,” he says, noting that the past 12 months saw Nasdaq fall 23% before rallying to new highs.

He blames behavioural biases, like anchoring on past prices, as culprits for missed gains.

The DBS CIO continues to champion his barbell portfolio strategy, which outperformed with an 8.9% return in 1H25.

This included 3.9% from income-generating short-duration corporate bonds under the “Liquid Plus” sleeve, 7% from growth equities focused on innovators and AI leaders, and 27% from gold, now viewed not only as an inflation hedge but also a geopolitical and currency reserve play.

According to Hou, this disciplined allocation becomes even more critical in a world where macro trends are turning. With global growth slowing and US inflation expected to tick higher temporarily, the broad trajectory still favours lower rates, a key tailwind for fixed income and dividend-focused equities.

The investment case for investment-grade ( IG ) credit has quietly become compelling. Yields above 4% across two-thirds of the bond universe represent a decisive shift from the zero-rate era. Despite narrower credit spreads, absolute yield levels remain attractive.

Hou favours 1-3 and 7-10 years, explicitly avoiding ultra-long durations due to steepening curve risks. With reinvestment risk looming as the Federal Reserve turns dovish, the Singapore bank’s Liquid Plus strategy’s strong return is a guidepost for bond-focused investors. Liquid Plus is a pure fixed income strategy that aims to provide cash and returns.

AI no bubble

Hou is emphatic that there is no AI bubble, insisting that we’re just in the first innings. “This is like electricity in the 1900s,” he notes. Nvidia, now a symbol of the AI wave, runs 78% gross margins from its chip IP.

For context, even Apple’s margin on the iPhone is 59%. Asset-light, high-margin, innovation-driven companies like Nvidia, Microsoft, and Amazon enjoy a structural advantage over capital-heavy legacy firms.

DBS continues to overweight tech and AI, and not just in the United States. The CIO also sees opportunity in select Asian dividend sectors –notably Singapore real estate investment trusts ( Reits ) and financials – as well as European industrials boosted by Germany’s fiscal spending pivot.

Position for pivots

One of the most pointed shifts in Hou’s portfolio is the rising allocation to alternatives, now at 14%. Gold remains a centrepiece, buoyed by a 27% year-to-date surge and steady buying by central banks as they diversify from the US dollar.

Beyond gold, Hou sees hedge funds and private assets as “non-market directional” alpha sources, ideal in a regime where traditional assets are increasingly correlated and volatility is heightened.

DBS’s asset allocation now stands at 50% equities ( with a tilt towards AI and quality global tech ), 36% fixed income, and 14% alternatives. This mix is built to ride out macro pivots, from deglobalization to digitalization, while keeping cash deployable.

Hou also points out that US$7 trillion in US money market funds serves as dry powder that could soften any potential market slide.

In short, while global growth slows, and inflation data may still deliver occasional shocks, the investment case favours structured resilience over panic. Anchored in income, growth, and diversification, Hou’s message is clear: the right portfolio is already prepared for the pivot.