If you’re looking to review your portfolio following a bumpy year in the markets, then you may be wondering what the experts think will be the best investments in 2026 and where the key opportunities for growth are.
The top stocks and funds for DIY investors throughout 2025 have reflected a turbulent year. We’ve seen Donald Trump’s tariffs threaten to upend global trade, DeepSeek disrupt the artificial intelligence (AI) narrative and, more recently, concern that the AI bubble may be about to burst.
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What does world politics mean for 2026 investments?
The macro outlook is in something of a state of flux. This is driven in large part by a shift away from globalisation towards more insular, populist policymaking. This is driven from the US under Donald Trump’s second term in the White House, but it is being echoed in Europe and South America.
“Trump is more symptom than cause,” says Johanna Kyrklund, group chief investment officer at Schroders. “What we see is a shift in the political consensus from an environment of globalisation, very tight fiscal policy, and therefore low rates [towards] a policy environment characterised by a backlash against globalisation, anti-immigration, and much looser fiscal policy.”
A more inflationary environment also implies higher global interest rates.
The most influential symptom of this new political reality is Trump’s tariff regime. This caused significant disruption in April, but the market has since calmed as the picture has become clearer – though there may be further turbulence on the horizon.
“In the very near term we need to find out what happens to the International Emergency Economic Powers Act (IEEPA),” says Ahmed. This is the legal framework that Trump used to bypass Congress when imposing tariffs, and it is being challenged in court.
“Initial indications are that it may be struck down,” says Ahmed. In that scenario, there could be greater volatility in the markets as the US administration attempts to rebuild its tariff regime in a different way.
Trump's 'Liberation Day' tariffs were one of the defining features of 2026.
All of this could end up spooking the bond market, as happened in April when spiking Treasury yields forced Trump to temper his initial ‘Liberation Day’ tariffs.
“The ultimate constraint on populist policy from a market perspective is the extent to which the bond market can take it,” said Kyrklund.
Mike Coop, chief investment officer at Morningstar Wealth, thinks that more of the extra costs of tariffs could be passed onto consumers next year. If so, that would push US inflation higher.
“The pre-Liberation Day inventories aren’t there anymore,” Coop told MoneyWeek. “You’re going to see more negative effect on the economy from that… downward pressure on growth, upward pressure on inflation.”
Long-dated government bonds are rising across the world thanks to increasing concerns over government debt, but remain within ranges that have been typical over the past 25 years.
“For now, because inflation is well-behaved, we think bond yields will be under control,” says Kyrklund, though she added that mounting government debt levels and rising inflation could be concerns over the medium term.
The outlook for equity investments in 2026
Developed markets: will US continue to dominate?
The populist macro environment that Kyrklund describes is implicitly beneficial for corporate profits, given that it acts to boost nominal growth – so it is a supportive environment for equity investors.
Some experts feel there are further gains to be had in the US market, though Coop observes that valuations in the market have become stretched.
“What is interesting is that despite stronger economic growth in the US, the US market trailed and didn’t outperform,” he said. “The fact that even the UK, with no AI at all, did better, tells you something about how elevated [US] share prices have become.”
Most agree that there are other sources of opportunity besides the US.
“The case for Europe has strengthened considerably,” says Niamh Brodie-Machura, chief investment officer, equities at Fidelity International. “Falling inflation, lower interest rates, and fiscal support all provide a supportive backdrop for corporate investment and consumer confidence.”
Among Europe’s most attractive sectors are aerospace and defence stocks, which are benefitting from the European re-armament trade.
Now is also a promising time to invest in Japan. Japanese stocks are benefitting from the country’s shift away from long-term deflation, and reforms to corporate governance. This is leading to increased levels of stock buybacks this year.
“Japan is one that investors should focus on,” says Brodie-Machura. “I think it’s the tortoise to America’s hare.”
More defensive-minded investors could take a contrarian take towards the equities market.
“As nations refocus on energy, security, and industrial strength, the companies serving these essential needs are emerging as some of the most undervalued and enduring opportunities in global markets,” says Alec Cutler, head of global multi-asset at Orbis.
Or for more growth-oriented companies, Cutler is particularly interested in biotech stocks.
“We’re finding amazing names that were down 60-90% from when they were incredibly popular and held by all the growth funds,” he says.
Could emerging markets be worth investing in 2026?
The setup is increasingly positive for emerging markets (EMs) especially given the context of a weakening dollar. Until this, a strengthening dollar had been a headwind for EM investors, but that has reversed especially since the tariff disruption. Emerging markets also currently exhibit lower levels of government debt as a percentage of GDP compared to developed markets.
Brodie-Machura also highlights that an improving economic backdrop in China is improving the broad EM picture, while in EMs ex-China, increasing domestic investment is setting the stage for valuations – which remain cheap – to rise.
“There are really interesting, strong corporates in many of these countries that are now starting to get attention again,” said Brodie-Machura, “so we think it’s a really good setup going into 2026.”
Mark Dunley-Owen, portfolio manager at Orbis investments, said that emerging markets “at a very high level look cheap”. He cites China and Brazil, in particular, as potential sources of value.
“Brazil has so much going for it,” says Dunley-Owen. It has a large, young population, abundant natural resources, and an entrepreneurial culture, but the challenges it is facing at present provide an opportunity for value investors.
Is AI still going to be the biggest investment opportunity in 2026?
The big question on everyone’s mind when it comes to equities is whether the current AI-driven bull market is sustainable, or if we’re looking at a bubble.
Through 2025, says Brodie-Machura, AI usage, use cases, and demand have all increased.
“For 2026, our team is focused on the shift from more foundational AI towards agentic AI,” she says.
Corporates are trialling agentic AI for uses such as energy efficiency, fraud detection and process automation, and Brodie-Machura believes these could drive further infrastructure spend if successful.
However, she cautioned that there is as yet no concrete proof of sustainable return on these investments. “That’s a really critical point that will determine how this develops through 2026,” she said.
Alongside these questions over long-term profitability is the way in which AI is financed.
“We are monitoring closely the increasing use of debt and circular financing to fund AI-related investment, as these trends could create longer-term structural vulnerabilities,” says Patrick Brenner, chief multi-asset investment officer at Schroders. “Although risks are present, particularly around the possibility of an “AI bust” scenario, we believe it is too early to take a defensive stance,”
Kyrklund advocates a stock-by-stock approach to investing in AI companies.
“I wouldn’t advocate passive exposure to this space at this point in time,” she says, but she feels that for the key players, current levels of capital expenditure feel sustainable.
Brodie-Machura thinks that exposure to Asian and Chinese tech is advisable going into 2026.
“Within those regions, there is the opportunity for best-in-class companies at reasonable valuations,” she says.
But when all is said and done, perhaps it isn’t all about AI anyway.
“Despite the fact that AI is still mentioned in every sentence, if you look at the actual performance in the world – even in the US – we’re seeing a much more rotational market, where other stocks are given a chance,” says Cutler.
As AI is further rolled out, it could have a disinflationary impact, according to Coop.
“You can do more with less,” he said. That implies “downward pressure on wages as well as prices”.
Is 2026 a good year to invest in bonds?
There is some caution creeping into private credit markets, says Marion Le Morhedec, global chief investment officer, fixed income at Fidelity International.
Investment grade bonds in Europe face a different outlook from US equivalents. A 40% increase in issuance in the US contrasts with just 5% in Europe.
But in high yield bonds, there is just a 5% increase in issuance in the US.
“Bonds don’t offer the same diversification benefits they did over the last decade,” says Kyrklund.
Bonds and equities were negatively correlated between 2000-2022, but this is something of an anomaly when viewed historically and is symptomatic of the deflationary macro backdrop during this period.
“In the last couple of years, we’ve seen a return to a more normal, positive correlation between bonds and equities,” says Kyrklund.
Kyrklund still believes that bonds have a role to play in portfolios, but “it’s for the old-fashioned reason of generating yield, rather than as a source of diversification”.
Commodities: a golden investment for 2026?
Because bonds and equities are becoming more correlated, commodities are taking on greater importance as a source of diversification. Gold is the standout commodity on this front, having gained 62% in the first 11 months of 2025, continuing its positive form from 2024.
Deutsche Bank analysts are now forecasting that the price of gold could approach $5,000 during 2026.
“There will undoubtedly be more geopolitical volatility in 2026; gold should provide some protection in this environment,” says Ahmed.
Dunley-Owen calls gold “doomsday security: something that does well when the world falls apart.”
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