In this multi-asset review, leading fund managers reflect on how the major market sectors fared over the past year, and what the outcomes could mean for 2026 and beyond.
Their perspectives highlight the resilience of markets in the face of headwinds and the growing importance of flexibility, fundamentals and discipline as we move through 2026.
Fixed income
By Christian Hoffmann, head of fixed income at Thornburg Investment Management
The global economy has shown surprising resilience despite significant headwinds such as tariffs, geopolitical uncertainty, and constrained fiscal flexibility. The Federal Reserve has had to balance relatively persistent inflation against downside risks to the labour market, all amid growing discomfort surrounding the continued independence of the institution.
Despite some volatility, 2025 proved to be a strong year for bonds – supported by both core rates and credit spread tightening – reinforcing our conviction in the role fixed income can play in client portfolios, both for income and as ballast. That said, we remain mindful of downside risks in credit, given today’s tight spreads and fewer tailwinds from global central banks.
One area where investors should be increasingly selective is private credit, which has shifted to a more defensive posture in recent months after an unprecedented decade-long ‘golden age’. This segment has yet to be tested through a full cycle, and we believe winners and losers will become increasingly self-evident.
AI has been the dominant theme in equity markets for several years, but 2025 marked a notable turning point for fixed income, with roughly 25% of investment-grade corporate issuance tied to AI-related bonds. At this point, we are not concerned about this debt, as it is backed by high-quality investment grade businesses with robust balance sheets. However, we remain sensitive to any shift in the broad-based euphoria surrounding AI and how that might impact risk assets more broadly.
Looking ahead, our base case assumes additional fixed income volatility in 2026. This underscores the importance of a flexible mandate – one that can dynamically adjust duration, credit exposure, and sector allocation to capitalise on opportunities that arise during bouts of turbulence.
Equities
By Chris Elliott, portfolio manager of the Evenlode Global Equity fund
The past year has been highly volatile for equity markets, with the reverberation of macroeconomic events and increased technological disruption. Despite this, many markets will end the year at or near record levels.
The year began with a broadening of equity market performance, after the narrow tech-led gains of the prior year. That momentum was interrupted in April when the Trump administration announced sweeping new tariffs, creating uncertainty for global supply chains and weighing on internationally exposed companies. The sharp sell-off in equities was short lived however, as it became apparent that implementation would be repeatedly delayed and trade negotiations took shape.
As the macroeconomic clouds lightened, attention swung back to technology. Semiconductor and AI-infrastructure companies pushed higher on heavy datacentre investment, while many information services businesses lagged as investors evaluated the threat from AI-inspired entrants. Elsewhere, banks performed well despite expectations for lower interest rates, and European defence companies benefited from rising military spending plans.
The result has been a year of contrasting fortunes, with growth and value styles outperforming. Many highly profitable, high-return businesses delivered solid fundamental results, yet their share prices underperformed. This sets the stage for a rebound in the quality investment style for 2026, as the market inevitably reverts its focus to fundamental value.
Investment trusts
By Tom Treanor, co-manager of the MIGO Global Opportunities Trust
Wide discounts and activism were the two key themes of the year for the investment trust sector. The year began with Saba Capital losing the votes on the shareholder meetings it requisitioned as retail owners came out in far higher numbers than most ever thought likely or possible. That said, Saba are not going away – they have achieved exits at tight or close-to-zero discounts at several trusts and have a vast pool of capital to work with. They have since emerged as buyers in several alterative funds, a departure from their usual turf given the lack of obvious hedges for some of their newer positions. As managers of MIGO, we were early to see the value in the alternative asset focused investment trust sector, where we can combine our analytical rigour and extensive due diligence with our approach of active engagement with boards and managers to unlock value and narrow or eradicate discounts to NAV.
As we end 2025, the challenges facing the sector remain unchanged and the ‘secular or cyclical’ question remains unanswered. We continue to believe the sector needs to carry on shrinking and working through the “Great Unwind” made necessary by a decade-long issuance boom of investment products now less suitable for the markets and buyer audience we have today. For the industry, the key challenge at the other end of this is how to find new sources of demand in the face of wealth manager consolidation.
Real estate
By Rogier Quirijns, head of European real estate at Cohen & Steers
Global real estate is on pace to outperform US real estate for the first time since 2017. Through the third quarter of this year, global REITs are up 10.4%, compared with US REITs, which are up 4.5% over the same period. What’s notable, given that US markets account for over 60% of global real estate, is how strongly Asia Pacific, Europe, and emerging markets have performed. Asia Pacific leads with a 27.4% gain, followed by Europe at 17.9% and emerging markets at 16.2%.
This is in stark contrast to recent history, when the US served as a safe haven while Asia grappled with political turmoil and Europe struggled with slower growth. Over the past five years, US REITs returned 7% annually, while Europe and emerging markets had negative annual returns, and Asia posted just 3.5% returns. This year marks a reversal of recent trends. China has returned nearly 30% on indications growth has bottomed, and Japan, Spain, Hong Kong, and the Netherlands have all posted returns above 20%.
The sectors we prefer in Europe include retail, that offers a relatively high yield with external growth opportunities, logistics with (datacentre) development upside and relatively good income growth potential. We also see self-storage as an attractive entry point for the medium-term, and we do like some selective office market exposure – like London offices for example.
In sum, the case for listed real estate is strengthening. With global markets rebounding, the second half of the decade reverting to fundamentals, valuations historically attractive, and macro conditions supportive, investors have compelling reasons to revisit allocations and embrace global diversification
Minerals and commodities
By Asad Farid, portfolio manager of the JSS Sustainable Equity – Strategic Materials fund
This year we have seen mining companies increasing investments to reduce their environmental footprint, driven by the need to secure long-term production in resource-constrained regions. In water-scarce countries such as Chile and Australia, major hubs for copper and lithium, limited water availability has become a major bottleneck. Without sufficient water, miners cannot operate at full capacity, forcing companies to rethink traditional extraction and processing methods.
At the same time, expectations around water use have risen sharply. Local populations face their own water constraints, and competition for this essential resource has intensified. As a result, social licence to operate is harder to maintain, and regulators are imposing stricter requirements. To secure permits and reduce conflict, miners are prioritising technologies that significantly lower water intensity.
This shift includes higher rates of water reuse, use of desalinated water, improved tailings management, and the adoption of new processes such as direct lithium extraction, dry-stack tailings, pre-concentration, and coarse flotation. These innovations have not only reduced freshwater demand but also enhanced operational resilience.
As mining shifts deeper underground, emissions reduction has also become essential for both sustainability and profitability. Ventilation systems represent a substantial portion of operating and capital costs in underground mines. To address this, gold and copper miners are accelerating investment in automation and electrification. Battery-electric equipment reduces heat and diesel particulates, lowering the ventilation burden while improving worker safety and cutting carbon emissions.
With the current boom in commodity prices, miners are better positioned to financially and strategically adopt these technologies, ensuring more sustainable operations over the long term.
