Philip Saunders, Director, Investment Institute, and Sahil Mahtani, Director, Investment Institute, at Ninety One

After a disorienting 12 months, in 2026 investors should position for a goldilocks macro backdrop, with above-trend growth, mild disinflation (despite higher-than-target rates) and risks to the upside. It adds up to a relatively benign outlook for cross-asset returns.  Despite geopolitical shocks, divergent policy cycles and questions around the sustainability of the AI boom, forecasts point to a broadly benign backdrop for cross-asset returns, underpinned by above-trend global growth and a fading inflation impulse.

“After a disorienting period for markets, investors may find that 2026 feels unexpectedly balanced,” said Philip Saunders, Director, Investment Institute. “We expect a Goldilocks environment — not too hot, not too cold — characterised by firm real growth, falling inflation and improved earnings visibility across regions. But this outcome still requires thoughtful positioning. This is not a year to rely on a single narrative; it’s a year to be selective and diversified.”

Growth to dominate as cycles disaggregate

Traditional market cycle frameworks have become less useful due to disjointed fiscal and monetary dynamics, labour-market resilience and asynchronous policy tightening. Nevertheless, a clear call emerges: growth, not inflation, is expected to be the dominant market driver.

Sahil Mahtani, Director, Investment Institute: “We see global growth running above trend at more than 3% in real terms.  Policy easing from 2025 is feeding through, labour markets remain tighter than headlines suggest, and inflation continues to trend lower across major economies. This combination points to a relatively supportive environment for risk assets.”  Although the backdrop is constructive, risks remain two-sided, including the possibility of a disorderly weakening in labour markets and a reassessment of AI-related capital expenditure.

AI: From ‘super-bubble’ fears to a more balanced path

Concerns of a dramatic AI crash are overstated. Instead, the more likely scenario is a necessary but modest correction that resets expectations and reinforces discipline around AI unit economics.  “There is a lot of talk about an AI bubble,” said Mahtani. “But what we are more likely to see is a healthy recalibration, not a collapse. Usage continues to explode,” efficiencies are improving, and investors are becoming more discerning. AI remains a powerful driver of productivity, but 2026 is about earnings delivery rather than storytelling.”

Geopolitics: Peak risk behind us

Despite events in Venezuela and Iran, geopolitical risk likely peaked in 2025, with the US and China entering a pragmatic phase of détente amid domestic economic priorities. While relations between China and Europe may come under renewed strain, particularly around trade and carbon-adjustment mechanisms, global tail risks are lower than they were a year ago.”

Asset class views: A year for rebalancing

• Equities: Global earnings remain solid, but stretched US valuations and concentration risk argue for a broadening of market leadership. International markets, along with cyclical, value and rate-sensitive sectors, are better positioned. Emerging markets hold particular appeal if the US dollar continues to weaken.
• Fixed Income: Developed market bonds offer reasonable value once again, with the potential to resume their traditional diversifying role. Emerging-market local bonds benefit from a combination of disinflation, elevated real yields and light foreign positioning.

• Credit: Public credit should stay resilient amid firmer growth, but more mainstream private credit markets will continue to be strained by leverage. A focus on quality issuance and specialist areas such as structured credit is appropriate. In private markets, less crowded markets such as EM offer a favourable risk profile.
• Commodities: Gold’s structural bull market endures, underpinned by central bank buying. Copper is expected to move into deficit as supply constraints meet rising demand from data-centre expansion and grid modernisation.

Mahtani concluded: “The world is still idiosyncratic, still fragmented, but also surprisingly resilient. For disciplined investors willing to look beyond noise and focus on fundamentals, 2026 could be a rewarding year.”

ENDS