Annual Investment Forum 2026: Defining the themes for the year ahead

As 2026 unfolds, investors face a world where the familiar anchors of the last decade feel increasingly unreliable. Rapid technological advances, shifting policy signals and growing fiscal and geopolitical strain are leaving markets with more uncertainty to absorb. Information is abundant, yet clarity is harder to grasp in a world where genuine signals are increasingly masked by noise.

Against this backdrop, it helps to focus on the forces shaping the next phase of the cycle. At the Forum, three themes stood out:

• Diversification, reflecting a world no longer driven by a single centre of gravity.
• Valuation discipline, as investors reassess whether markets are compensating them adequately for visible and hidden risks.
• Innovation, led by the diffusion of artificial intelligence (AI) and new technologies redrawing cost structures, competitive dynamics and growth pathways across the real economy.

These themes were brought into sharp focus by our CIO panel with Fabiana Fedeli (CIO, Equities, Multi Asset and Sustainability), Andrew Chorlton (CIO, Fixed Income) and Emmanuel Deblanc (CIO, Private Markets) and resonated throughout the following sessions with our investment experts. Together, we believe they offer a roadmap for investors seeking resilience and opportunity in the year ahead.

Diversification: Rethinking concentration beyond a single centre of gravity

For much of the past decade, a narrow group of US mega‑caps anchored global returns and helped sustain the narrative of American exceptionalism. That comfort faded in 2025.

The US remains a formidable economic engine, but the risks linked to concentrating exposure by stock, style or geography have become difficult to overlook. As Fedeli observed, “A small cluster now accounts for roughly half of the S&P 500’s value. If that is not your intended exposure, it is time to rethink it.” 

“The US remains a formidable economic engine, but the risks linked to concentrating exposure by stock, style or geography have become difficult to overlook.”

Daniel White (Head of Global Equities) described this environment as a K‑shaped market where a handful of stocks soar while the rest of the market delivers a more mixed reality. His view was not to abandon the US, but to look beyond the overstretched leaders and toward the parts of the market where earnings breadth is returning and valuations remain grounded.

Market leadership not limited to the US

Europe, long overshadowed by the US, re‑entered the conversation last year. A long spell of scepticism obscured the region’s well-capitalised banks, stronger household balance sheets and comparatively healthier fiscal positions. Richard Halle (European Value Equities Fund Manager) suggested that the region could unlock significant latent potential, helped by supportive policies and automation’s ability to ease demographic and wage pressures in the coming years.

Emerging markets (EM) also regained attention. Long seen as a tactical allocation punctuated by periods of stress, EM economies today display the fiscal discipline and monetary credibility once associated primarily with developed economies. As Chortlon highlighted, many EM economies have had to be disciplined because they could not print their way out of trouble – that discipline is now an advantage.

“As Chorlton highlighted, many EM economies have had to be disciplined because they could not print their way out of trouble – that discipline is now an advantage.”

The breadth of the 2025 EM equity rally, which Michael Bourke (Head of Emerging Market Equities) described as a reminder of how wide the opportunity set truly is, reinforces how materially the story has broadened. Charles de Quinsonas (Head of Emerging Markets Debt) added that EM debt is now regarded as a strategic allocation rather than tactical – reflecting a broader reassessment as markets begin to catch up with improved conditions.

Seeking differentiated returns

As correlations tighten across traditional asset classes, investors are looking for diversification in places where cashflows behave differently. James King (Head of Structured Credit) pointed to renewed interest in asset-backed securities, a diverse set of real economy exposures that can offer genuinely differentiated returns.

Europe also looks compelling from a private markets perspective, according to Deblanc. In his view, Europe is no longer priced for perfection, meaning valuations now understate the region’s underlying strengths.

“In his view, Europe is no longer priced for perfection, meaning valuations now understate the region’s underlying strengths.”

Real estate illustrates the same dispersion. Martin Towns (Global Head of Real Estate) observed that after two years of repricing, global property markets are stabilising, although the recovery remains uneven and driven primarily by structural themes rather than cyclical lifts.

He notes that Europe and Asia Pacific are leading the rebound in real estate as capital broadens beyond the US, favouring resilient assets such as prime offices, logistics and living sectors. It’s a reminder that diversification now demands structural strength, not just regional spread. Chorlton also identified Asia as a potential source of genuine diversification for fixed income investors.

Altogether, these developments point to an investment world no longer orbiting a single centre of gravity. As growth and resilience disperse across regions and return drivers, diversification prepares portfolios for a global economy with multiple engines, not just one.

Price: Valuation discipline in a world with less certainty

If diversification reflects how the world’s growth sources are widening, valuation reveals how unevenly markets are pricing this new reality.

Valuation is becoming more important as markets adjust to a world where political, fiscal and technological risks are harder to ignore. The assumptions that once moderated these risks, such as policy stability and low volatility, are no longer reliable. As a result, price has taken on a renewed role, helping investors judge not only what they are buying, but how much uncertainty they are being asked to absorb.

“As a result, price has taken on a renewed role, helping investors judge not only what they are buying, but how much uncertainty they are being asked to absorb.”

From a fixed income perspective, Chorlton observes that the era of low interest rates, when credit risk drove most returns, has shifted to one in which he believes government bond yields once again provide meaningful compensation. While sovereign debt potentially offers value today, tight credit spreads offer little defence against such a febrile environment. Anthony Balestrieri (CIO Americas, Fixed Income) added that in such conditions, even modest market volatility can erode the additional income investors expect.

Gaurav Chatley (Credit Fund Manager) warned that elevated valuations can encourage complacency and weaker lending standards. In this environment, due diligence and selective stock picking become important to avoid being caught out.

Equity markets reflect a similar repricing of risk. John Weavers (US Dividend Fund Manager) observed that significant AI-related investment has pushed capital expenditure ahead of revenue for some hyperscalers, even as markets assume continued strength in returns on capital. He added that AI is also disrupting sectors previously viewed as defensive, from software to consumer staples, reinforcing the need for valuations that retain an adequate margin of safety.

Halle’s perspective on disciplined value investing brought this point into focus. In a market marked by elevated valuations and rapid shifts in sentiment, investors need anchors, and valuation discipline provides that ballast. Growth is welcome, he argued, but only when paired with valuation discipline rather than momentum.

“In a market marked by elevated valuations and rapid shifts in sentiment, investors need anchors, and valuation discipline provides that ballast.”

The same valuation logic applies in private markets. Recent US defaults have raised eyebrows, but as Michael George (Director, Leveraged Finance) stressed, these were idiosyncratic events rather than systemic. He believes what matters now is relative value, and European private credit currently offers stronger protections and better yields. Even here, resilience depends on the basic equation of price, risk and return.

Underlying these perspectives is a behavioural truth. Fedeli notes, “The crises that do the most damage are seldom the ones investors prepare for.” When old anchors are less reliable, valuation becomes the discipline that transforms uncertainty from threat into investable risk. Price then functions as the core safeguard, helping to protect portfolios from risks that sit just beyond the horizon.

Innovation: AI as a broad economic force, not a sector story

If diversification identifies new areas of opportunity and valuation determines how much confidence to place in them, innovation is the force reshaping those opportunities. After all, data has been called the new oil.

Across the Forum, there was a clear consensus that AI is no longer a bounded theme or a story confined to Silicon Valley. It is permeating entire economies, altering business models, productivity curves and competitive moats. But equally, participants stressed that they believe this moment is not a repeat of the dot-com era considering many AI companies already have established models and meaningful earnings.

Jeffrey Lin (Head of Thematic Technology Equities) distinguished between near‑term and long‑term speculation. In his view, the most immediate impact of AI will involve automation of routine tasks rather than autonomous intelligence. Over time, its impact may come through technologies it enables, such as robotics and autonomous systems, where the potential is transformative but less predictable.

The early phase of the AI cycle has been dominated by heavy infrastructure buildout, with hyperscalers and hardware producers laying the foundations for future deployment. The next phase, Fedeli says, may come from companies using AI to improve resilience, streamline operations or personalise customer engagement, not just those supplying the computational infrastructure. This transition expands the investable universe: healthcare, industrial automation, logistics, financial services and consumer platforms are all entering an adoption cycle that may create new winners.

Geography will influence innovation’s dispersion. Deblanc emphasised Asia’s role as a natural testing ground for AI‑enabled business models, with faster adoption cycles, adaptable enterprise infrastructure and strong semiconductor ecosystems. EM experts also highlighted Vietnam, Mexico and India as beneficiaries of the interaction between automation, supply chain reconfiguration and competitiveness.

“Deblanc emphasised Asia’s role as a natural testing ground for AI‑enabled business models, with faster adoption cycles, adaptable enterprise infrastructure and strong semiconductor ecosystems.”

Private markets offer another view of innovation. Nadia Nikolova (CEO, responsAbility Investments) noted that many small and medium-sized enterprises in EM are modernising rapidly and often leapfrogging legacy systems. She points out that these developments rarely register in public indices, yet they are already reshaping the investable universe at the ground level.

Niranjan Sirdeshpande (Head of M&G Catalyst) stressed that while innovation can shape a better future, investors must judge whether new technologies or scientific breakthroughs translate into real commercial value.

Innovation is therefore not a vertical silo, but a structural force redistributing growth, widening the opportunity set and altering where the next decade’s leadership may emerge. Its promise is real, but its impact will vary widely, which is why a combination of diversification and valuation discipline will be essential in capturing its benefits.

Conclusion: A market that rewards preparation, not prediction

Across diversification, valuation and innovation, the narrative is consistent. The coming year will not be defined by a single macro story or a dominant market leader. Instead, it will be shaped by the interaction of several forces – political, technological, economic – moving at different speeds.

Diversification broadens the opportunity set in a world with more than one economic engine, valuation discipline ensures investors are paid to bear uncertainty and innovation reconfigures where and how growth emerges.

For investors willing to adapt to a more distributed and less predictable world, 2026 offers not just challenge but the chance to position portfolios for a decade in which leadership rotates, assumptions reset and resilience becomes the new competitive advantage.