Overview
Global asset owners are feeling less confident about meeting their return targets in 2026 compared to 2025 as ongoing war in Iran, which has spilled over to the Middle East, has elevated geopolitical risk to top of mind for investors. Notably, more allocators have flagged that they are willing to dial up risk to achieve performance objectives, according to the 2026 CIO Sentiment Survey – a global initiative of Top1000funds.com.
The survey, which is now in its 11th year, has become an important annual barometer around asset allocation decisions, risk appetite and organisational design trends among asset owners.
Over half of the respondents (52 per cent) selected higher-for-longer-rates or sticky inflation as their base case scenario in the next 12 months. And despite continued enthusiasm towards the AI thematic in public and private markets, only 19 per cent of CIOs considered accelerating growth spurred by AI productivity as their base case in the near future.
Less respondents are considering disinflation or a soft landing (8 per cent) or recession (6 per cent) as their base case.
CIOs were asked to rank their top concerns and equity risk is still overwhelmingly what they perceived to be the biggest threat to their portfolio, but geopolitical risk climbed up from the ranks last year, surpassing inflation risk. They are also worried about private markets liquidity, credit risk and interest rates risks, though to a lesser extent.
The planned net allocation change is negative for both active and passive equities but the withdrawal from active equities is significantly more pronounced.
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Confidence in meeting return target
% of respondents choosing "Yes"
Taking more risk to achieve return target
% of respondents choosing "Yes"
“You have to pick from your multiple battles, if you want to call them that,” says Elmer Huh, CIO of US not-for-profit endowment M.J. Murdock Charitable Trust and member of the Oregon Investment Council who participated in the survey.
“There are multiple things that are on top of investors’ minds. Some of them will hit their inflection points this year, and some of them won't,” he says. But investors have to brace for persistent volatility in the coming years regardless.
The 2026 respondents are predominantly chief investment officers of pension funds, endowments, foundation and sovereign wealth funds. Over half (52 per cent) of the respondents work for large allocators, defined as having more than $25 billion in assets. Geographically, 58 per cent of the funds are domiciled in North America, with the rest spread across Asia Pacific, Europe, the Middle East and Africa, and Latin America.
When asked to comment on specifics around equity risks, asset owners are worried about valuation and concentration risks. However, more CIOs are looking to increase their equity allocations than those who are looking to decrease it. The trend is particularly pronounced around active emerging markets equities and active global equities.
The planned net allocation change is negative for both active and passive equities but the withdrawal from active equities is significantly more pronounced.
Percentage of CIOs making allocation changes
Planned allocation changes
Equity
Alternatives
Fixed income
Emerging markets equities have experienced renewed enthusiasm from investors as the asset class posted stellar performance in the past year. The MSCI Emerging Markets index returned 33.57 per cent in 2025, surpassing MSCI ACWI index’s 22.34 per cent, both in US dollar terms.
Fixed income also saw a net positive in planned allocation changes, with active unconstrained fixed income and active emerging market debt the strategies with the highest planned net allocation increase. More investors are taking money out of passive fixed income than those putting capital in.
Alternative asset classes seeing different stories
Sentiment towards alternatives tells an interesting story as appetite for the category broadly has hit a five-year low, with only a net of 9 per cent of respondents planning to increase allocations this year, compared to the five-year peak of 38 per cent in 2022.
Within alternatives, the sub asset classes are seeing vastly different trends. While more asset owners are looking to increase than decrease allocations to hedge funds, infrastructure/real assets and private credit; the survey saw reverse sentiment in private equity, real estate and venture capital.
When asked if the concern around private markets exits, especially regarding private equity, will persist in 2026, QIC state investment chief investment officer Allison Hill, who participated in the survey, is expecting a divergence of views among asset owners. QIC is the $52 billion sovereign wealth fund for Australia’s Queensland state government.
“I'm hopeful with [a] strong macroeconomic backdrop that it is a good environment for exits. But I think those exits will probably likely be really split across continuation funds, take up by other private roll-ups into other private equity companies and in some cases, IPOs,” she tells Top1000funds.com.
“I think the IPO market in particular has been a little bit slower than historically in recent years, and hopefully that rectifies, but it is definitely an issue that's weighing on the private equity sector.”
Fund managers can expect to work harder for investor capital this year as only a net 2 per cent of CIOs are planning to add new partners to their manager roster. This is a stark downward trend when compared to previous years with a net of 28 per cent and net 19 per cent in 2025 and 2024 respectively.
In alternatives, private credit has the highest planned net manager allocation increase (26 per cent) followed by private equity, with some respondents highlighting the need to access more specialist managers. Real estate has a net manager allocation decrease.
CIOs under increasing pressure
Over the years CIOs have been asked to rank the top challenges they face as investment leaders. This year a new pressure point has emerged as the top challenge: personal time constraints, followed by data or AI constraints and understaffed internal teams.
“I'd say the thing that I want to focus on more, apart from connecting with our managers, is making sure that I'm connecting with our team and that we're maintaining that cadence, rhythm and a missional mindset to say ‘hey, are we all on the same page about X?,” Huh says.
“Do we feel like we're slipping anywhere – so having some really good conversations around that on a regular cadence.”