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In 2026, we forecast macroeconomic volatility to ease from this year’s levels and the more stable growth conditions to support returns across asset classes that should converge at 5%1
In listed markets, we see positive trends aligning for convertible bonds, a liquidity surge in Asia that will support structural growth in the region, and value in genuinely decarbonising firms
In the alternatives space, hedge funds are well-positioned to navigate the new geoeconomic era and growing fragility of the passive behemoth, while private equity secondaries and energy infrastructure assets offer resilience and growth.
2026 should see the macroeconomic volatility of this year – headlined by the capricious US tariff rollout and negotiations – yield to more stable conditions in 2026. Our base case anticipates 1.5% growth and 2% inflation in developed markets and 3.5% growth in emerging economies1, which should benefit markets. Central-bank dovishness will aid manufacturing-heavy economies, AI capex in the US could fuel growth without stoking inflation and Europe’s infrastructure investment is likely to deliver a supply-side boost.
Read our 2026 investment outlook
Explore our macro and asset-class outlooks for 2026, covering opportunities across public and private markets globally and in Asia and Switzerland.
Returns across asset classes should converge at 5%, in our view, driven by carry and price appreciation. Yet potential risks – such as a less accommodative Federal Reserve (Fed) or derating of US tech stocks – ensure the case for diversification and convexity strategies remains. In 2026, balanced growth will call for well-balanced portfolios.
Fig 1. 2026 return expectations – globally and in Switzerland2
Our 2026 investment outlooks
Globally, across regions and within asset classes, diverse risk and return dynamics are shaping opportunity sets as we progress into 2026. See below for an overview, or download our full outlook to more comprehensively understand the perspectives of our CIOs and Portfolio Managers.
Sustainable equities
The fundamental case: superior economics and technology continue to drive systemic shifts
Despite the current mega-cap tech dominance, history shows that major transitions – like today’s shift from fossil fuels to electrification – are driven by superior technologies and economics. In 2026, rising power demand from industry and transport, heating and data centres will keep accelerating a systemic shift to clean energy across value chains. AI, rather than sidelining sustainability, will be an enabler – advancing electrification, optimising resource use and improving accessibility and affordability in healthcare and finance. With sustainable opportunities evident across sectors and influenced by factors including fundamentals, investor positioning, and policy and technogical shifts, many of these will continue to be mispriced – creating opportunities for investors with a broad and forward-looking mindset.
The systematic case: real portfolio decarbonisation for untapped value
Systematic equity strategies that prioritise real portfolio decarbonisation – rather than simply favouring low emitters – continue to offer untapped potential for value creation. Companies with credible, science-based targets have consistently delivered excess returns versus their peers, particularly among high-carbon sectors where transition leaders are emerging. While the opportunity in low-carbon stocks appears to be diminishing, the divergence underscores the case for focusing on high-carbon companies committed to rapid decarbonisation. With net-zero adoption accelerating globally and the energy transition gaining momentum in emerging markets, we believe this approach will remain a strong source of value in 2026.
Secondaries, infrastructure, sustainability are key opportunities
The ability of private assets to offer resilience and growth through structural forces of economic growth, not cyclical dynamics, will continue in 2026. In our view, three areas of opportunity stand out: GP-led secondaries, core infrastructure aligned with the energy transition, and specialised sustainability-driven strategies. Secondaries are an essential liquidity tool in today’s market and provide investors with access to seasoned portfolios of quality assets. Infrastructure’s characteristic inflation-linked returns and long-duration cash flows are now paired with the growth dynamics of the energy transition. Sustainability – no longer constrained to specific sectors – is now embedded in value creation across the economy, with middle-class consumption, urbanisation and government-led initiatives fuelling capital needs in regenerative agriculture, circularity solutions and green technology. These dynamics underpin the growth potential of private markets in 2026 and beyond.
Positive equity, volatility and convexity trends are in play
Following a strong 2025, we see conditions staying favourable for global convertible bonds in generating attractive, risk-adjusted returns in 2026. Equity dynamics look set to remain the primary driver of performance potential, supported by corporate earnings and the macroeconomic backdrop. Meanwhile, the convertible bond universe continues to expand. Robust issuance from companies including innovators in the AI value chain has expanded the market and restored convexity. This enhances upside potential with downside protection, highlighting the fundamental appeal of convertibles. Volatility, now an opportunity rather than a risk, and growing investor demand further support the outlook.
Navigating the new geoeconomic order and passive fragility
2026 will mark a shift from monetary to fiscal dominance, with sovereign states weaponising economics and prioritising nominal GDP growth to manage record debt via inflation. This favours assets linked to capital spending and nominal growth while penalising long-duration bonds and cash. The rise of passive investing – underpinned by suppressed volatility – has created a fragile, pro-cyclical market structure vulnerable to shocks and forced ETF selling. These shifts, which generate volatility and dispersion, should create fertile ground for alternative strategies. Investment success, in our view, depends upon: identifying geoeconomic beneficiaries (such as AI, energy and reshoring firms), deep security selection as correlations collapse, owning real assets and inflation hedges, and analysing capital flows over fundamentals.
Asia is awash with capital and we see this continuing into 2026, signaling a favorable environment for markets. The structural shift is fueling a new era for investors: ample liquidity, falling interest rates, and capital returning home are combining to push yields lower and drive record equity gains. Abundant liquidity in a region that already has vast savings reserves will support assets across the board, in our view. With technological advancements, domestic consumption and structural growth themes leading the charge – and with India remaining a long-term standout, in our view – the region offers compelling opportunities.
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Characteristic quality backed by improving growth outlook
Lower US tariffs and resilient local manufacturing should lift Swiss GDP growth to 1.2% in 2026, with inflation near 0-0.5%3. The Swiss National Bank’s 0% policy rate should support liquidity, though easing capacity is limited. However, Switzerland’s low-beta profile, political stability and innovative firms offer insulation amid global uncertainty. Fixed income remains attractive through carry and quality fundamentals, with opportunities in subordinated financials and real estate issuers. Equities are benefitting from reasonable valuations, expected US rate cuts and structural growth themes in the domestic market: AI, biopharma and the energy transition.
Diversification and convexity for a normalising market
As global economic conditions normalise, balanced diversification should outperform concentrated bets, in our view. Our base case favours strategies blending price trend potential with strong carry, supported by duration exposure and selective equity and commodity allocations. Key risks include: sticky inflation keeping rates higher for longer and a tech sector derating amid elevated US valuations. Convexity will be critical for portfolio resilience, achieved through targeted strategies and allocations. The rise of diversified exposures versus concentrated portfolios in 2026 would buck the post-COVID trend but be aligned with long-term norms. Succeeding in this world would require flexibility, risk-management overlays and opportunistic – even bold – tactical shifts.
Current US inflation and policy rates above neutral keep the Fed’s path challenging, but cuts toward a terminal 3% level in 2026 should broadly support fixed income, in our view. Risks include US consumer weakness, leveraged tech valuations and, should the AI investment case falter, the growing level of AI capex financed off-balance-sheet. With credit spreads tight for a third year, the focus remains on carry and fundamentals – avoiding vulnerable sectors like chemicals, autos and consumer cyclicals. Fallen angels and the broader BBB–BB bond space offer value, while efficient implementation in high yield, including the use of CDS indices for extra spread and rolldown, can potentially enhance performance.
In 2026, stabilising growth and market conditions should incentivise investors to find a new portfolio balance. Shifting geoeconomics, capital and liquidity flows, and rapid technological progress stand to replace US tariff uncertainty and mega-cap dominance as dominant narratives. Simultaneously, the imperative of decarbonisation and other systemic shifts linked to sustainability will continue to disrupt value chains and compel firms to engineer new business models. In our view, this new balance will require growth, income, diversification and convexity.
This document is a Corporate Communication for Professional Investors only and is not a marketing communication related to a fund, an investment product or investment services in your country. This document is not intended to provide investment, tax, accounting, professional or legal advice.
