As we enter a new year, an investment landscape is emerging that requires a combination of vigilance and ambition. The US – long a crucial engine of global growth – faces institutional challenges and potentially stretched asset valuations. While AI-related stocks remain an essential part of portfolios, investors should be selective to mitigate the risks of any fallout.
In this environment, Europe, China and India may offer broader, more diversified and attractively priced opportunities. Diverging inflation trends – rising in the US but subdued elsewhere – and contrasting monetary policies underscore the importance of regional diversification, especially for those seeking resilient income in a more volatile world. Emerging market central banks have greater policy flexibility, which, combined with potential further weakness in the US dollar, could support emerging market debt.
Private markets are no longer merely “alternative” – they have become foundational to long-term portfolio construction. Within this space, private credit and infrastructure stand out as powerful drivers of long-term value creation, financing the real economy, bridging infrastructure gaps, and enabling structural transformations such as deglobalisation, decarbonisation and digitalisation. Success will hinge on careful manager selection and disciplined underwriting.
We think charting a course through 2026 will require a variety of tools across a range of asset classes, public and private. We are pleased to share the insights of our experts, who outline their key ideas and opportunities for 2026 – designed to help guide you towards new pathways in a rapidly evolving investment landscape.
Key takeaways
Global growth is proving resilient, with the boom in AI helping to offset problems stemming from tariffs and trade wars. Yet valuations in US tech stocks are richly priced with extreme levels of concentration – careful selection will be critical.
A broadening of tech spend outside the US could sustain growth and usher in a truly global AI revolution. We believe European equities are currently more attractively priced than many US counterparts.
Though dynamics vary across regions, inflation is generally under control in key markets. Most central banks are normalising interest rates, with room for more accommodation. This benign outlook remains supportive of carry and could favour well-diversified portfolios.
Stagflationary risks and a potentially weaker dollar may prompt global investors to rethink high exposures to US assets. While it is premature to forecast the dollar’s demise, there is potential upside for fixed income issued in Europe and Asia, as well as for gold.
Problems in US non-bank lending have shone a light on private credit. While recognising that credit spreads are historically tight, we do not see systemic risks and continue to forecast strong growth driven by higher interest rates and investor demand.
Funding the energy transition and digital infrastructure will create opportunities across asset classes, including for investors with the ability to hold long-term and illiquid assets.
Source: Allianz Global Investors
