In 2026, the equities market began with significant volatility. In February, stock prices of many technology companies came under pressure from the so-called “SaaSpocalypse” where advanced AI agents are replacing traditional SaaS tools, triggering fears that products from firms like Salesforce will soon be rendered obsolete. 

But global bond markets delivered a strong year of returns in 2025, with the Bloomberg Global Aggregate Index posting a total return of more than 8 per cent on an unhedged USD basis – the highest since 2020. 

The percentage of CIOs making allocation changes has declined slightly compared to last year, to 32 per cent. Broadly, more asset owners are planning to increase equity and fixed income allocations than those decreasing them.

Within equities, emerging markets received the most interest as a net of 22 per cent asset owners are looking to invest more in active strategies in these markets – a reversal of the 2025 sentiment where 14 per cent respondents were looking to trim the allocation. 

“I think really what we see is that, at the moment there is more dispersion in stocks and there are more opportunities for differentiation among stocks. So we think active managers should have an opportunity set to earn returns,” says QIC chief investment officer Allison Hill. 

“That’s in the equity space, but also we're increasing our allocation to hedge funds, which responds to the opportunity to be able to capitalise on some of these stock specific or thematic specific opportunities as opposed to broad market beta.”

In fixed income, active unconstrained and active emerging markets debt received the most interest, but passive fixed income has seen a net 14 per cent of CIOs who are looking to decrease allocations. 

For a more detailed breakdown of alternatives investment, please see the Alternatives section.

Inflation remains the popular base case

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. On March 19 the US Federal Reserve projected higher inflation after the Iran conflict pushed up oil prices, with the central bank’s chair Jerome Powell conceding that “nobody knows” the scale of the war’s economic impacts.  

Notably, despite continued enthusiasm towards the AI thematic in public and private markets, only 19 per cent of CIOs consider accelerating growth spurred by AI productivity their base case in the near future.  

Less respondents are considering disinflation or soft landing (8 per cent) and recession (6 per cent) as their base case.  

In combatting the inflation risk, the most common measure CIOs are taking is investing in inflation-proof private markets (43 per cent), followed by adjusting the fixed income duration (30 per cent), adding more floating rate exposure (20 per cent) and reducing rate exposure and increasing credit (13 per cent).

Investors who are looking to add new asset exposures to their portfolio in the next three years are looking at several common areas: private credit, commodities and liquid alternatives are the most popular items on the wish lists.  

But some are looking to rotate back into traditional asset classes with one Australian CIO saying their fund is looking into “unloved old school assets where it makes sense”, such as domestic core property. Agriculture or nature-based assets are also flagged by three CIOs as potential investments.

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