The global macro environment through 2025 has been characterised by erratic US trade policy, escalating conflict in the Middle East, and changing monetary policy as most developed market central banks try to balance the risks of cutting interest rates too quickly against inflationary data still above target and an uncertain economic growth outlook.
Despite this, equity markets have performed well, with risk appetite supported by optimism surrounding artificial intelligence (AI), albeit questions are starting to be asked around share price valuation levels and the expected rate of return on investment. 2025 also saw international markets, such as the UK, Europe and Japan, outperforming the US, showing a broadening of performance among global markets.
Against this backdrop, we believe a balanced exposure to global markets that is diversified not just across geography, sector and asset class, but also investment style can offer attractive risk-adjusted returns. With uncertainty around US tech valuations and increased concentration of markets, a diversified approach that seeks to mitigate these risks by maintaining exposure across regions and sectors, while avoiding over-reliance on any single theme or group of stocks is vital in navigating uncertainty.
Looking ahead: Staying on the right side of disruption
The AI growth story remains a dominant force shaping markets in 2026, continuing to fuel both optimism and caution among investors. Concerns about an AI-driven bubble persist – particularly given the sharp appreciation in technology stocks – so we remain vigilant in assessing whether valuations are supported by fundamentals or are drifting into speculative territory.
We continue to prioritise companies positioned to benefit from long-term sustainability and innovation trends. We see compelling opportunities in sectors such as industrials and information technology, which are rich with innovators tackling efficiency, climate challenges, and digital transformation. Businesses in electrical equipment, professional services, software, renewable energy, automotive technology, and infrastructure are well aligned with secular themes like electrification, AI integration, digital services, and decarbonisation. These firms represent the essential “picks-and-shovels” providers enabling the global transition towards a digital, electric, and green economy.
We believe in identifying high-quality businesses with strong ability to generate cash and durable growth prospects. This approach helps mitigate volatility during periods of market stress and reflects lessons learned from past cycles – companies with robust balance sheets and competitive barriers to entry tend to outperform in uncertain environments. By staying on the right side of disruption – investing in businesses driving structural change rather than those vulnerable to it – we aim to navigate potential turbulence while delivering attractive risk-adjusted returns over the long term.
Looking ahead, we expect AI adoption, decarbonisation, and infrastructure investment to remain powerful tailwinds for global equities. However, heightened volatility and concentration risks underscore the importance of a diversified portfolio as we move through 2026.
Concentration risk: An investment market becoming increasingly reliant on a few companies or a single sector, making it vulnerable should there be a setback.
Diversification: A way of spreading risk by mixing different types of assets or asset classes in a portfolio on the assumption that these assets will behave differently in any given scenario.
Monetary policy: The policies of a central bank aimed at influencing the level of inflation and growth in an economy. Monetary policy tools include setting interest rates and controlling the supply of money.
Risk-adjusted return: A calculation of an investment’s return or potential return that takes into account the amount of risk required to achieve it.
These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.
Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
The information in this article does not qualify as an investment recommendation.
There is no guarantee that past trends will continue, or forecasts will be realised.
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