US economic growth is expected to slow next year due to institutional challenges and elevated valuations, while AI-related stocks remain attractive but require selectivity. These insights come from the 2026 Outlook published by experts at Allianz Global Investors. Europe, China and India offer diverse and attractively priced equity opportunities. Diverging inflation and interest-rate dynamics make regional diversification increasingly important. Emerging markets may benefit from flexible monetary policy and a weaker US dollar, particularly in debt markets. Private markets have become a core component of portfolios, with private credit and infrastructure supporting long-term value creation and accelerating the transition towards decarbonization and digitalization. Success will depend increasingly on careful manager selection and disciplined underwriting.

Christian Schulz

Macroeconomic Outlook

Christian Schulz, Chief Economist, notes that “the global economy enters 2026 still digesting the aftershocks of the trade wars.” Global growth is expected to cool only slightly, to around 2.7%. The AI-driven investment cycle and proactive policy responses provide important support. Schulz projects that “US inflation will rise above 3%, while Europe and Asia will face more moderate price pressures, creating room for rate cuts.” Geopolitical risks remain high, although “tentative de-escalation in the Middle East offers a welcome relief.” The US and China continue to lead in AI, with increasing positive spillover effects to other regions. While elevated valuations in tech and parts of less-regulated finance call for vigilance, lower interest rates and moderate private-sector leverage reduce the probability of systemic financial instability.

Equity Strategy

Michael Heldmann

Michael Heldmann, CIO Equity, believes Europe is “better positioned than the US” thanks to lower concentration risks and more attractive valuations. “European equities are broadly more attractively priced than many US counterparts,” says Heldmann, “making them appealing for both value and growth investors.” The US market, meanwhile, remains “expensive and highly concentrated,” requiring a selective approach. Heldmann highlights India as a standout market due to its “favorable demographics, fast-growing digital infrastructure and solid fundamentals.” China represents “a long-term opportunity supported by market depth, innovation capability and policy support.” Together, Europe, India and China form a “compelling framework for global equity allocation.”

Fixed Income

Jenny Zeng, CIO Fixed Income, describes a “supportive environment for fixed income,” driven by diverging inflation paths, growth trends and policy directions. This creates opportunities for selective duration and credit positioning. “Tight credit spreads demand vigilance,” Zeng notes, “especially in interest-rate-sensitive sectors,” though she sees limited systemic risk. She advocates for “active management, regional diversification and strict liquidity and risk controls,” emphasizing that “emerging markets and Asia remain strong investment destinations over the medium to long term.”

Multi-Asset

Greg MA Hirt

Gregor MA Hirt, CIO Multi Asset, characterizes 2026 as “a year of contrasts, where optimism and caution coexist and markets fluctuate between resilience and recalibration.” He sees an agile approach as essential, with a strong focus on diversification and active portfolio management. Hirt remains “more cautious on the US” due to high valuations, market concentration and underestimated stagflation risks, while Europe offers a “more favorable outlook” supported by improving earnings momentum. He favors “emerging-market debt, which benefits from a weaker US dollar, robust domestic demand and disciplined policies.” Hirt also sees a case for “reassessing US dollar exposure” in favor of other currencies and regional bonds. He treats volatility as a separate asset class, noting that “cross-security volatility is elevated, and low correlations mask broader risks.”

Private Markets

Marta Perez (CIO Infrastructure) and Sebastian Schroff (CIO Private Credit & Private Equity) highlight that “private markets will remain a key engine for long-term returns in 2026.” They identify five major trends: the rise of secondaries as a core allocation, growing diversification across strategies and regions, widening performance dispersion among managers, increasing participation of private wealth, and geopolitical and macroeconomic realignment. According to them, “private credit and infrastructure are powerful drivers of value creation,” financing the real economy and accelerating the transition to decarbonization and digitalization. “Careful manager selection and disciplined underwriting are becoming increasingly critical,” they warn, “as the gap between top- and bottom-quartile managers continues to widen.”