The investment research and managed account provider took overweight positions in both asset classes, highlighting that quality companies are also expected to benefit in a soft landing scenario.

“Because parts of the equity markets are expensive, you really want to focus on those types of companies if we have a pullback and those that will continue to do well in a soft landing scenario,” Zenith co-founder and chief investment officer David Wright said.

He added that the quality of the stock is represented by strong balance sheets, stable earnings, growing earnings and low debt levels.

Global small caps, meanwhile, have been attractively valued for some time.

"On the sentiment side, certainly price momentum and increasing risk appetite is evident and that's positive," Wright said.

Accepting a soft landing as the main scenario for some time, Zenith noted that such outcomes are "actually quite rare" and come with risks, according to Damien Hennessy, head of asset allocation.

Despite "a very aggressive rate cut cycle in the US," Hennessy explained, markets are reassessing the likelihood of further cuts given the resilience of the economy.

"We've had a soft landing as our main case for probably the last 12 to 15 months and it seems to be unfolding," he said.

US elections

According to Zenith, a divided Congress is the most likely outcome of the US election, whether Donald Trump or Kamala Harris wins the presidency.

Hennessey noted that under a Trump presidency with a divided Congress, bond yields would likely peak, stocks would improve and the U.S. dollar would see a slight uptick. In contrast, a Harris presidency would still support capital appreciation but lead to lower bond yields and a softer US dollar.

"There was also talk of a clean sweep of the Republicans," he said.

That scenario suggests a mix of policies that includes higher tariffs, expanded tax breaks, ongoing fiscal spending and perhaps cuts to immigration.

"Those three or four policy plans are generally seen as inflationary, so the market is starting to appreciate that as an opportunity," Hennessy said.

"And even though the election is only 24 hours away, the result may not be known for some time after that."