There’s a moment when smart money moves to cash becomes the prudent path, and then there’s a moment when even seasoned asset managers ride the wave higher. For global funds that’ve logged double-digit gains in equities for three consecutive years, the latter moment isn’t now.
“Our view is for solid growth accompanied by easier monetary and fiscal conditions, which supports a risk-on stance in our multi-asset portfolios. We remain overweight in stocks and credit,” stated Sylvia Sheng, global multi-asset strategist at JPMorgan Asset Management.
“We’re riding the strong trends in place and remain bullish through the end of next year,” added David Bianco, Americas chief investment officer at DWS. “For now, we aren’t playing the contrarian card.”
“Begin the year with ample exposure, even a touch overexposed to equities, especially in emerging markets,” advised Nannette Hechler-Fayd’herbe, EMEA chief investment officer at Lombard Odier. “We don’t anticipate a recession in 2026.”
Those insights come from Bloomberg News interviews with 39 investment managers across the US, Asia, and Europe, including teams at BlackRock, Allianz Global Investors, Goldman Sachs Group, and Franklin Templeton.
More than three-quarters of the allocators are positioning portfolios for a risk-on environment through 2026. The core bet is that resilient global growth, ongoing advances in artificial intelligence, accommodative monetary policy, and continued fiscal stimulus will yield outsized returns across global equity markets.
The call carries risks, notably the sheer pervasiveness of this view and the high level of confidence some managers express. This optimism among institutional investors also aligns with sell-side strategists worldwide.
If these bullish expectations unfold, they could deliver a fourth consecutive year of bumper performance for the MSCI All-Country World Index, extending a rally that has added about $42 trillion in market value since the end of 2022—the most wealth creation ever seen for equity investors.
That optimism isn’t unfounded. The AI boom has added trillions in market value to dozens of AI-centric firms, though AI remains in an early-stage development phase even three years after ChatGPT’s public debut.
No Tech Bubble, say the buy-side
Most buy-side managers push back on the idea that the technology rally constitutes a bubble. While several acknowledge pockets of froth in unprofitable tech names, about 85% of managers argue that valuations in the Magnificent Seven and other AI leaders aren’t sky-high. They point to solid fundamentals underpinning the trade, signaling the start of a new industrial cycle.
“You can’t call it a bubble when tech companies are delivering strong earnings beats. In fact, earnings from the sector have surpassed those of nearly all other US stocks,” noted Anwiti Bahuguna, global co-chief investment officer at Northern Trust Asset Management.
This perspective reinforces the view that the US will remain the engine driving the rally.
“American exceptionalism isn’t dead,” stated Jose Rasco, chief investment officer at HSBC Americas. “As AI spreads globally, the US will play a pivotal role.”
Many investors echo BlackRock’s Helen Jewell, who also urged looking beyond the US for meaningful upside.
“The US hosts the high-return, high-growth companies, so valuations are realistic, but there are probably more compelling opportunities elsewhere,” she said.
Global earnings momentum fuels optimism
Profits matter most to equity investors, and substantial increases in government spending from Europe to Asia have raised earnings projections.
“We’re witnessing a meaningful broadening of earnings momentum across market caps and regions, including Japan, Taiwan, and South Korea,” said Wellington Management equity strategist Andrew Heiskell. “Looking into 2026, there’s clear potential for a revival of earnings growth in Europe and a wider array of emerging markets.”
Goldman Sachs Asset Management’s Alexandra Wilson-Elizondo highlights India as a standout 2026 opportunity.
“We see real potential for India to become the Korea-like re-rating story of 2026, shifting from tactical allocations to strategic core exposure in global portfolios,” she explained.
Nelson Yu, head of equities at AllianceBernstein, anticipates improvements outside the US that will mandate allocations, pointing to governance reforms in Japan, capital discipline in Europe, and improving profitability in several emerging markets.
Small-cap optimism and sector picks
On the stock-picking side, investors are eyeing AI proxies, particularly among clean-energy producers that can meet AI’s voracious demand for power. Smaller companies also attract interest.
“The earnings outlook has brightened for small-capitalization stocks, industrials, and financials,” said Stephen Dover, chief market strategist at Franklin Templeton Institute. “Small caps and industrials—typically more leveraged—should see profits rise as the Fed trims rates and debt-servicing costs fall.”
Santander Asset Management’s Francisco Simón expects US small caps to grow earnings by more than 20% after years of lagging. The Russell 2000 has recently touched new highs on this optimism.
Meanwhile, a combo of low valuations and solid fundamentals makes healthcare one of the most compelling contrarian opportunities in a bullish cycle, according to many managers.
“Healthcare sectors can surprise to the upside in US markets,” noted Jim Caron, chief investment officer for cross-asset solutions at Morgan Stanley Investment Management. “The midterm election year and policy shifts could support many companies. Valuations remain attractive and have room to catch up.”
Caution amid optimism
Despite the upbeat tone, nearly all allocators caution that risks lie ahead. The top concern is a renewed US inflation surge. If the Fed is compelled by rising prices to pause or even abandon its easing cycle, volatility could surge.
“A scenario where US inflation reaccelerates in 2026 would be a double blow for multi-asset funds, penalizing both stocks and bonds. That would be far worse than a plain economic slowdown,” warned Amélie Derambure, senior multi-asset portfolio manager at Amundi SA.
She adds that “the path to 2026 requires the Fed’s support.”
Trade tensions and geopolitical risks
Another risk is political volatility, especially potential trade tensions under President Donald Trump. A flare-up in tariffs that fuels inflation would weigh on risk assets.
Oil and gas stocks remain out of favor for many, though a major geopolitical disruption could shift momentum. Such events tend to boost energy prices, but the overall impact on risk assets is likely negative.
Geopolitics from the Middle East to the Ukraine/Russia front could influence oil markets and global risk appetite.
European autos are also tagged as a concern for 2026, due to intense competition from Chinese automakers, margin pressures, and the transition to electric vehicles.
“Personally, I don’t expect a rebound in that sector,” commented Isabelle de Gavoty of Allianz GI.
Overall, most managers see little reason for momentum to stall—except for the ever-present risk of a contrarian signal from such widespread bullishness.
“Right now, almost everyone is risk-on, which is a bit worrying because concentrated bets leave less room for a surprise,” cautioned Amundi’s Derambure.
