Heading towards the end of the year means investors start thinking, if they haven’t done so already, about what the year ahead will bring.
Taking their crystal ball to look at 2026, the team at Schroders have highlighted their views on equities, private markets and fixed income.
Much investor debate, even worry, already surrounds equity markets and how they will shape up.
“As we head into 2026 there is a lot of concern about equity market valuations and comparisons are being drawn with the dotcom bubble,” said Johanna Kyrklund, group chief investment officer at Schroders.
“Looking at market valuations, we think that equity markets are still supported by the fact that bond yields are well-behaved, inflation is quiescent for now, and central banks are likely to ease a bit more,” she said.
And she added: “Over the medium term, I am concerned about mounting government debt levels and the potential for inflation to accelerate, leading to higher discount rates, but over the next six months this risk is low.”
She also sees a low risk of a US recession. “Although the labour market is softening, unemployment is still low and private sector balance sheets are in good shape. At market level, we still see positive returns from equities.”
So for 2026, Schroders see a low risk of recession, contained bond yields and earnings momentum – which leads the asset manager to stay positive overall.
“The waters are getting choppier but we still see ways of navigating them to get to our destination. It is too soon to seek shelter,” Kyrklund added.
In addition, understanding the unique drivers and risks present in specific markets, sectors and companies remains essential for investors navigating the global equities landscape.
“Notwithstanding market concentration, relatively high valuations and rising fears about a potential AI bubble, the outlook for global equities isn’t necessarily negative,” commented Alex Tedder, chief investment officer of equities at Schroders. “Positive economic momentum, robust earnings support and structural investment in new technologies may underpin global markets for a while yet.”
Private market opportunities
For private markets, continued macroeconomic and geopolitical volatility play into the hands of private markets, which can benefit from both cyclical and structural tailwinds allowing them to potentially play a key role in diversified portfolios.
“Resilience has become the key watch word for investors in an era shaped by persistent uncertainty,” said Nils Rode, chief investment officer at Schroders Capital. “The surface calm of markets today masks a complex backdrop. Inflation remains sticky, fiscal pressures are building, and geopolitical flashpoints continue to test global stability.”
“Periods like this challenge investors to look beyond short-term momentum and focus instead on the durability of returns – and on bottom-up value creation,” added Rode. “In this context, private markets can be seen as a key area where cyclical and structural forces are aligning to create opportunity.”
Global fixed income: Attractive opportunities
When it comes to global fixed income, investors looking toward the 2026 landscape, suggest Schroders, is shaped by cycles that are increasingly out of sync across major economies, with the trajectories for inflation, monetary policy and economic growth diverging across regions.
“2025 has been a year of differentiation in bond markets, with very large divergences in yield moves, both between geographies and at different maturities of the curve. We expect this to continue as we head into 2026,” said Julien Houdain, head of global unconstrained fixed income at Schroders.
“This provides huge opportunity – but only to those who are active in their bond allocation and capable of taking advantage of fast-changing and disparate economic conditions globally,” he noted
Lisa Hornby, head of US fixed income, at Schroders also noted that US fixed income markets continue to benefit from moderating inflation, more stable fiscal dynamics and a resilient – if somewhat slower – economy.
“In this environment, high-quality sectors such as agency MBS (mortgage-backed securities) and long-dated tax-exempt municipals should remain well positioned in 2026,” she said.
“The strong performance in 2025 reinforces the thesis that starting yields matter, and investors who focus on quality and value are likely, in our view, to be rewarded as supportive conditions carry into next year,” Hornby added.
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