The Investment Outlook Introduction: February 2026

Geopolitical risk remains a structural feature of markets: from the ongoing uncertainty surrounding US–Denmark–Greenland negotiations to the recalibration of probabilities around the Taiwan Strait.

These developments remind us that investors must remain attentive to how evolving political dynamics reshape the distribution of outcomes, not just the headlines themselves.

At the same time, artificial intelligence (AI) is redefining how economies and industries organise themselves.

The recent release of Claude Opus 4.6 illustrates this vividly. Anthropic’s latest model moves further into high-value knowledge work with multi- agent capabilities, deep document handling and enterprise-grade task orchestration.

While impressive in its technical leap, the launch triggered renewed volatility in software and data-services stocks, as markets grapple with the uncertainty around how far AI-powered multi-agent systems may overlap with traditional enterprise workflows.

For investors, this underlines both the scale of the opportunity and the need for realism: AI is accelerating, but its second-order effects - on productivity, margins, pricing power and competitive moats - will not be evenly distributed.

Monetary policy adds a further layer of complexity. Markets still expect the Federal Reserve (Fed) and its new Trump-friendly chair, Kevin Warsh, to cut rates later this year. But investor confidence hinges on institutional credibility at a time when central banks face heightened scrutiny and political crosswinds.

As we’ve discussed internally, the path of the US dollar and cross-asset volatility will depend less on any single decision and more on how the Fed communicates its decisions in a contentious election year.

Regionally, we see widening divergence. Asia has demonstrated resilience, despite sharp factor rotations - partly due to better diversification and policy support.

Europe, meanwhile, is navigating significant style dislocations, with value–quality swings challenging traditional positioning. Several large European asset owners are openly reassessing their US exposure, reflecting both valuation concerns and a desire to balance geopolitical risk.

These differences argue strongly for selective positioning, rather than broad regional calls.

As always, I encourage readers to approach 2026 with a combination of curiosity and discipline. Remember, diversification is your friend. We face a landscape defined by uncertainty, but not without opportunity—especially for those investors who are willing to think in terms of scenarios and adapt early to structural shifts.

Amid the need for adaptation, we are particularly excited about our new enhanced fixed-income offering, which draws on our factor insights, systematic research and improved risk tools. It provides a more precise way to express bond duration, credit and yield-curve views.

Early feedback has been encouraging, and we see this capability becoming an important addition to our active and systematic strategies.

In this first edition of the Investment Outlook for the year, we once again ask different teams for their latest insights. This quarter, you’ll find:

The House View: The global economy is still showing resilience. Growth worldwide is steady, inflation is declining and policies are slowly becoming less restrictive - all of which benefit risk assets.

Macro: We examine US economic growth, changing geopolitics and varied monetary policies to navigate a rapidly evolving world.

Emerging Markets: As US stocks reach extremely high valuations and market concentration hits record levels, emerging markets could provide a more stable growth opportunity and help to rebalance portfolio risk.

US Equities: US small-caps may rebound in 2026, buoyed by low valuations, rising earnings and rate cuts. Will quality smaller companies outperform mega-caps as market leadership changes?

Fixed Income: Learn what makes the BBB–BB crossover universe a particularly attractive part of global credit. It can deliver high-yield-style returns without entering the highest-risk areas of the market.

Private Credit: What if the risks surrounding private credit have been overstated? Discover lesser-known market segments that could provide investors with stability, protection and attractive income opportunities.

Sustainability: Sustainable investing is being influenced by changes in geopolitics, laws and market conditions. Learn why 'grounded sustainability' is becoming important, and how more precise mandates and better policies may change what investors can achieve.

Digital Assets: Stablecoins offer faster, cheaper and more transparent payments. But will new UK regulations enable financial institutions to harness this potential?

I hope you enjoy these articles.