Investment Strategy for 2026 Outlook

This document is an investment strategy report outlining the outlook for 2026, titled 'Blowing Bubbles?'. It discusses expectations for risky assets to outperform amid an artificial intelligence (AI) boom, easing fiscal and monetary policies, and reduced trade tensions. The report identifies three key themes for asset allocation: equities, income, and diversifiers. It anticipates strong AI-driven earnings growth in equities, particularly in the US technology sector, while recommending diversification due to elevated valuations. The report also highlights emerging market (EM) bonds as attractive investments, offering higher yields compared to developed market (DM) bonds. Additionally, gold is expected to continue gaining value, with alternative strategies and currencies being essential for diversification. The document addresses potential risks, including AI disappointment and credit events, and emphasizes the importance of scenario planning for investors to manage risk exposure effectively. Overall, it provides a comprehensive framework for navigating the investment landscape in 2026.