Madison Asset Allocation Funds: Q4 2025 Strategy and Outlook

Madison Asset Allocation Funds presents its strategic positioning for Q4 2025 against a backdrop of slower growth, persistent interest-rate sensitivity and uneven global recovery. The portfolio management team emphasizes capital preservation while seeking measured upside through selective equity exposure and diversified income sources.

Fixed income remains a central risk-management tool. With yields elevated and rate volatility likely to persist, the funds favor a defensive posture: shorter-duration exposure, quality credit selection, and selective use of municipal and inflation-protected securities to manage real returns and tax efficiency. Where appropriate, laddered maturities and active duration management are used to capture attractive yields while limiting interest-rate sensitivity.

In equities, the approach is selective and valuation-aware. The team prefers high-quality companies with durable cash flows, pricing power, and balance-sheet strength. Sector tilts lean toward defensives and secular growth areas that can withstand economic softness. International and emerging market allocations are maintained tactically, with active rebalancing to exploit relative valuation gaps and currency opportunities.

Alternatives and real assets play a complementary role. Allocations to real estate, infrastructure, and commodities are used to hedge inflation risk and diversify correlations versus traditional stocks and bonds. The team uses liquid vehicles where possible to preserve portfolio flexibility and meet liquidity needs.

Risk management and rebalancing discipline are core to the strategy. Portfolios are managed within target allocation ranges, with disciplined rebalancing to lock in gains and buy value after drawdowns. Scenario analysis and stress testing inform position sizing and hedging decisions.

Tax and cost considerations are incorporated into implementation choices, particularly in taxable accounts where municipal bonds and tax-aware harvesting can add value. The funds emphasize transparent communication with investors about trade-offs between yield, duration, and return-seeking exposures.

Looking ahead to Q4, Madison’s team remains cautious but constructive: prepared to increase risk exposure where valuations and macro signals improve, yet anchored by defensive positioning to protect capital if volatility re-emerges. The overall aim is to deliver consistent, risk-adjusted outcomes aligned with investor objectives through active management and disciplined execution.