Optimistic about equities
Equities delivered strong returns in 2025, and we see opportunities in this asset class in the new year as well. We also have a positive view on gold, as it allows investors to add diversification to their portfolios.
The macroeconomic outlook is positive. The European Central Bank (ECB) completed a rate-cut cycle in 2025, and the Federal Reserve (Fed) started a rate-cut trajectory. Low interest rates are favourable for economic growth and financial markets. In the US, growth is further supported by massive investments in AI. In Europe, governments are ramping up fiscal spending. Examples include Germany’s Merz administration’s ambitious plans for large-scale public spending on infrastructure and defence, collectively referred to as a ‘fiscal bazooka.’ Many of these investments were announced in 2025. Their actual implementation will begin in the coming year, and this is expected to have a stimulating effect on the economy and corporate profitability.
Corporate earnings prospects are favourable. Companies in the US S&P 500 Index and the European STOXX 600 Index are expected to achieve double-digit earnings growth in 2026. This gives us reason to remain optimistic about equities. Equities delivered strong returns in 2025, and we expect this asset class will continue to do well in 2026. Therefore, we are entering the new year with a positive outlook on equities.
“Companies in the US S&P 500 Index and the European STOXX 600 Index are expected to achieve double-digit earnings growth in 2026. This gives us reason to remain optimistic about equities.”
Thomas Pellegrom – Investment strategist
Industrial sector benefits from surge in investments
Specific opportunities can be found in the industrial sector. Companies within this sector stand to benefit from government orders to equip armed forces with appropriate materials. The same applies to companies that produce materials for the construction or maintenance of railways, electricity networks, bridges and roads. Against this backdrop, we hold a positive view of equities in the sector industrials (overweight).
US more attractive than Europe
On a regional level, we see greater potential in US equities compared to their European counterparts. We expect the US economy to show stronger growth in 2026 than the eurozone economy. Growth in the US is partly driven by investments in AI, with companies active in this area being dominant players on the stock exchange (think of major technology firms). As mentioned earlier, substantial investments will also be made in Europe, which will provide a boost to the eurozone economy, though growth here is expected to be slower than in the US. Therefore, we are entering the new year with an overweight position in the US, an underweight position in Europe and a neutral stance on emerging markets.
Bonds
We maintain a neutral view on bonds, with a preference for high-quality bonds. Within this segment, we see more opportunities in covered bonds – corporate bonds backed by collateral – than in government bonds. We expect long-term yields on German government bonds to gradually rise in 2026 due to the aforementioned large-scale investments by the German government. For investors in government bonds, this is not good news (bond prices fall when yields rise). Covered bonds are less vulnerable to political developments and government fiscal decisions than government bonds. Therefore, we hold a positive view on covered bonds. Our stance on investment-grade corporate bonds remains neutral.
We remain cautious regarding the riskier bond segment. Within this segment, we prefer emerging market debt over high-yield corporate bonds. We consider high-yield bonds expensive, meaning investors are not adequately compensated for the risks they take.
Gold keeps shining
We also see opportunities in gold. Gold proved to be an excellent investment for investors in 2025, showing an exceptionally strong rise and reaching a record level of nearly USD 4,400 per ounce in October. Despite this, we still find gold to be an interesting investment. Gold is regarded by investors as a ‘safe haven,’ particularly during periods of geopolitical tensions, such as the war in Ukraine or unrest in the Middle East. Moreover, central banks continue to buy gold, as they aim to hold fewer reserves in US dollars. We believe this trend will persist.
Gold is also likely to benefit from a weaker dollar, which we foresee in 2026. Furthermore, gold is often used to hedge inflation risks. Particularly in the US, inflation remains a concern. Investors are also worried about the independence of the Federal Reserve. Many of these factors are expected to remain relevant in 2026, as outlined in the article Risks. We continue to view gold as an attractive asset for portfolio diversification and therefore maintain an overweight allocation.
Would you like to learn more about our expectations for gold? Read our outlook on gold.
“For thematic investors, AI remains intriguing. Developments in AI are advancing rapidly. The emergence of agentic AI is the next trend to watch.”
Piet Schimmel – Senior Equity Thematic Expert
Equity theme: agentic AI
Finally, thematic opportunities may arise in the field of agentic AI. This form of artificial intelligence deploys so-called AI agents. These are software components capable of independently planning, executing and improving tasks with limited human oversight. Unlike generative AI, which only produces content, AI agents take actual actions. For example, when planning a trip with ChatGPT, an AI agent could be tasked with finding and booking the best hotels and travel options.
For investors, exploring this new phase of the AI revolution could be interesting. Currently, we see AI-related investment opportunities in areas such as AI infrastructure, including providers of cloud and data centre services, as well as companies in the semiconductor industry. Finally, we continue to see growth potential among cybersecurity providers specialising in AI.
Would you like to learn more about agentic AI? Ask your investment advisor about our recently published thematic report – ‘The next frontier of AI: Agentic AI.’
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