Aviva's Saldanha urges portfolio diversification as US Treasury yields near 5%
In brief
- Richard Saldanha at Aviva Investors recommends portfolio diversification amid rising Treasury yields
- US 10-year yields near 4.75% in July 2026, driven by fiscal pressures and inflation
- Growth and technology stocks face pressure from higher yields due to discounted cash flow valuations
- Saldanha targets 90% upside participation with 80% downside capture strategy
Yield Pressure on Growth Sectors
US 10-year Treasury yields traded in the range of roughly 4.69% to 4.75% through the latter part of August 2026, with a peak near 4.75% in late July. Sectors built on discounted future cash flows—think long-duration technology or speculative growth names—are the most exposed when yields rise. These businesses rely on earnings far in the future, which become less attractive as risk-free rates climb.
Saldanha's framework targets roughly 90% upside participation relative to benchmarks, with downside capture of around 80%. This approach emphasizes capital preservation during market stress while maintaining meaningful exposure to gains.
Aviva's Positioning
Saldanha rejoined Aviva Investors in December 2024, returning after a stint at Royal London Asset Management. The timing places him at the firm as macro headwinds intensify. Aviva posted a group operating profit of £1.326 billion for the first half of 2026, a 24% increase compared to the same period a year earlier, with the interim dividend lifted 7% to 14 pence per share.
The backdrop of higher yields and inflation reshapes how investors should think about valuation and diversification. Growth at any price—a mantra of recent years—no longer holds in an environment where the cost of capital has structurally reset.
