Robert Plant, Portfolio Manager, Multi Asset Solutions, Columbia Threadneedle Investments.
1. Which investment themes could prove to be consequential in 2026?
In 2026, we expect the investment landscape to remain broadly positive, but the risk environment is becoming increasingly complex. On the upside, potential drivers include additional monetary easing in the US, a broader cycle of AI investment that could extend beyond technology into wider sectors, and stronger spillover effects from Germany's fiscal stimulus and China's policy support.
However, downside risks are notable: political pressure on the Fed, signs of labour market weakening, and ongoing fragility in China, where the anti-involution campaign and tighter restrictions on local government support threaten to deepen the deflationary slump.
Europe also faces fiscal vulnerabilities, particularly in France and the UK, which could weigh on confidence. Against this backdrop, themes such as selective exposure to high-quality equities, AI-linked growth opportunities, and relative positioning in China versus other emerging markets remain central, while investors should stay alert to policy uncertainty and structural imbalances across major economies.
2. What's the outlook for the US economy?
The US economy appears on track for a soft landing rather than a recession or stagflation. Growth is likely to moderate in early 2026 as tariff related price pressures temporarily erode real incomes, but activity should reaccelerate from the second quarter supported by resilient corporate earnings and accommodative financial conditions. Fiscal stimulus from the One Big Beautiful Bill Act and continued strength in AI driven investment will help offset near term headwinds.
Inflation is expected to remain above target through the first half of the year, with core PCE close to 3%, before gradually easing as wage growth moderates and housing costs decline. The labour market is cooling at a measured pace rather than experiencing a sharp downturn, yet corporate feedback indicates that weakness in consumer spending is spreading beyond lower income households. Consumer confidence continues to soften, and redundancies are rising, highlighting the fragility of a K shaped economy increasingly reliant on high income households and buoyant equity markets.
3. There appears to be growing sentiment around positioning against the US dollar, is this a short-term trend or a structural change?
Current positioning against the dollar reflects a mix of tactical and emerging structural considerations. While the dollar posted its weakest first-half performance in 50 years, near-term resilience is supported by relatively higher US yields and economic outperformance.
However, structural vulnerabilities persist, driven by twin deficits and the risk of political influence over Fed policy. Alternatives such as the euro remain constrained by fiscal challenges in key economies like France, limiting immediate diversification. A sustained structural rotation away from US assets would require a meaningful improvement in trend growth and policy credibility outside the US.
4. The US stock market has seen a major resurgence since Liberation Day. How are you positioned on US stocks? How concerned should investors be due to high valuations and concentration risk?
We maintain a tactical overweight in US equities, supported by strong corporate profitability, resilient economic performance and leadership in technology and artificial intelligence. Valuations, however, are elevated and among the highest starting points in history, while concentration risk extends beyond the Magnificent Seven. Although this narrow leadership recalls the late 1990s, company fundamentals today are far stronger, with robust margins, healthy free cash flow and lower leverage.
High price to earnings ratios typically signal weaker long‑term returns, yet short‑term performance can remain strong when backed by accommodative policy, solid earnings and investor confidence. Return on equity has improved steadily over the past decade, justifying higher valuations in select sectors, and investors continue to reward disciplined capital allocation. Conscious of concentration risk, we advocate diversifying into sectors and regions with more attractive valuations, such as the UK and emerging markets.
5. Which asset classes / sectors are you overweight / underweight going into next year?
We hold an overweight position in global equities as we head into 2026, with particular emphasis on Emerging Markets supported by a favourable macroeconomic backdrop and compelling valuations. A weaker US dollar, expected declines in short term US rates and a strong credit impulse in China create conditions that have historically supported Emerging Market outperformance.
We remain constructive on US equities, driven by earnings strength and leadership in innovation. Conversely, we are underweight in Europe and Japan, citing fiscal vulnerabilities and earnings softness, although we have trimmed the Japan underweight as corporate reform gains traction.
Within fixed income, we favour duration in UK gilts as the stalling economy provides the Bank of England with scope for additional rate cuts beyond what markets currently price in. Investment grade credit remains attractive given robust corporate balance sheets, below average default rates and expectations of only modest economic slowing rather than recession. To manage currency risk, we maintain a partial hedge on sterling against the US dollar.
6. Multi-asset funds were the most popular investment strategy among UK investors this year. What is driving that performance and is it set to continue?
The popularity of multi asset funds reflects their ability to deliver diversification and smoother returns in an environment of heightened macro uncertainty. These strategies have benefited from balanced exposure to equities, credit, and government bonds during a period of strong equity performance and stable fixed income yields. The appeal is reinforced by the shift towards outcome-oriented investing, where clients prioritise risk-adjusted returns over directional bets.
The trend toward multi asset solutions appears sustainable given ongoing economic uncertainty, inflation concerns, and geopolitical tensions that make single asset class investing increasingly challenging for investors. Looking ahead, multi asset managers with flexibility to incorporate dynamic asset allocation and downside protection will likely continue to attract inflows.
7. Away from market-driven motives, what are the practical reasons financial advisers may be directing client capital towards multi-asset funds?
Beyond performance considerations, multi asset funds offer operational simplicity and cost efficiency for advisers. Regulatory scrutiny has intensified regarding suitability and risk management, with multi asset solutions offering built in diversification that helps demonstrate appropriate client risk matching. These funds also align well with client preferences for transparency and ease of monitoring, as they consolidate multiple exposures into a single vehicle. Additionally, they support advisers in delivering consistent outcomes across a broad client base.
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