Welcome to Lighthouse

Welcome to Lighthouse, our quarterly investment outlook from the Life Investment Office – the team managing £164bn of assets, including the PruFund range of funds at £73bn on behalf of the Prudential Assurance Company (PAC). Our 80-strong team of investment specialists bring deep expertise across asset allocation, manager oversight, strategy design, liability management, derivatives and portfolio management.

In this quarter’s edition, we explore three themes shaping today’s investment landscape – and likely to influence market outcomes and client decisions in the months ahead. First, we take stock of the AI boom and how it is reshaping corporate investment, economic activity and market returns, as the AI investment cycle evolves from large-scale investment towards adoption, monetisation and productivity gains.

Second, we examine what a change in Federal Reserve leadership could mean for bond markets, and whether investors should brace for greater uncertainty and volatility under the new leadership. Third, with many portfolios relying on the same set of underlying drivers, we review some of the changes we have applied to PruFund this year, as we search for genuinely different sources of return beyond traditional return drivers – through the introduction of volatility and momentum strategies.

Finally, we reflect on the trends defining 2026, including events and market developments that have shaped the year so far, and share our perspective on the forces most likely to influence investor outcomes through the remainder of 2026. We also outline how this informs PruFund’s current positioning and asset allocation.

We hope this edition offers clarity, fresh perspective, and supports your client conversations on long-term investing.