{"id":693204,"date":"2026-01-13T13:20:24","date_gmt":"2026-01-13T13:20:24","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/693204\/"},"modified":"2026-01-13T13:20:24","modified_gmt":"2026-01-13T13:20:24","slug":"what-star-managers-expect-to-outperform-in-2026","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/693204\/","title":{"rendered":"What star managers expect to outperform in 2026"},"content":{"rendered":"

Veteran managers were divided on artificial intelligence and the regions that will offer the best opportunities.<\/p>\n

Markets experienced a tumultuous 2025, going from DeepSeek and Liberation Day-mania in the first six month to the renewed optimism over artificial intelligence (AI) of the second half of the year. Most markets ended in the black, as demonstrated by the chart below.<\/p>\n

Performance of markets in 2025<\/strong><\/p>\n

\"\"<\/strong><\/p>\n

Source: FE Analytics<\/p>\n

Little of this could have been foreseen in advance, and while no one\u2019s crystal ball is better than anyone else\u2019s, well-known managers that have been doing their job well for longer might be worth listening to. Below, we asked a number of them which investments they think will do well in 2026, and why.<\/p>\n

\u00a0<\/p>\n

The debate over AI<\/strong><\/p>\n

The debate over AI is polarising, with some managers still optimistic and others increasingly wary.<\/p>\n

For James Cook, FE fundinfo Alpha Manager on the JPM Global Growth and Income Trust<\/a>, the companies \u201ctranslating AI investment into tangible financial results are emerging as clear winners\u201d.<\/p>\n

While it is important to be selective, semiconductor producers and those adopting AI at scale, such as TSMC, are poised to be the biggest beneficiaries, regardless of which AI company \u201ccomes out ahead as the world\u2019s leading foundry\u201d.<\/p>\n

Nick Train, manager of the Finsbury Growth and Income Trust<\/a>, said the rise of AI would continue to benefit UK stocks.<\/p>\n

The strategic value of assets such as Experian will become clearer as the \u201carms race between competing AI agents\u201d will cause businesses to pay more for companies with large, proprietary data sets.<\/p>\n

On top of this, technology-driven productivity tends to drive down inflation and AI \u201clooks set to be the biggest productivity driver yet\u201d.<\/p>\n

As a result, Train expects US and UK interest rates to be \u201cnotably lower\u201d over the next couple of years. This would indirectly benefit companies such as Diageo, which have struggled due to a lack of consumer confidence.<\/p>\n

Among the more cautious was James Thomson, manager of the Rathbone Global Opportunities<\/a> fund, who has reduced his allocation to AI this year in favour of other areas.<\/a><\/p>\n

While the AI story has performed very strongly, concentration in markets has become \u201ceyewatering\u201d, he said. Indeed, despite defensives and cyclicals trading strongly in recent years, \u201cboth have shrunk before a tech-trained one-trick pony\u201d.<\/p>\n

Market cap weightings in the US<\/strong><\/p>\n

\"\"<\/strong><\/p>\n

Source: Rathbones, Topdown Charts, LSEG. Data as of 3rd December<\/p>\n

To satisfy this growing demand for tech, there has been \u201ca tidal wave\u201d of leveraged exchange-traded funds (ETFs), which represent almost 25% of total new fund launches last year.<\/p>\n

\u201cThere\u2019s a lot of highly speculative bets being made by tourist investors with fear of missing out. That sort of behaviour can cause volatility to spike when the mood turns,\u201d Thomson said.<\/p>\n

Raheel Altaf, Alpha Manager of the Artemis SmartGARP Global Equity<\/a> fund, also took of a more cautious stance and said AI is the area that \u201cinvestors should be most wary of\u201d in 2026, as valuations and concentration risk \u201cremain a serious concern.\u201d<\/p>\n

\u00a0<\/p>\n

Opportunities beyond AI<\/strong><\/p>\n

Some experts saw attractive opportunities in areas beyond AI, with Altaf believing that the rotation from growth to value could still have further to go.<\/p>\n

The gap between the cheapest and most expensive companies on the market \u201cremains quite large versus history\u201d due to the dominance of passive funds, which are positioned away from value stocks and make them \u201cunusually cheap\u201d.<\/p>\n

Altaf saw compelling opportunities in financials, commodities and cyclicals.<\/p>\n

Mike Fox, head of equities at Royal London Asset Management, is also bullish on financial stocks, which have performed very well in recent years.<\/p>\n

The FTSE World Financials index is up 76.9% over the past three years, but it could have further to run, according to the manager. Part of this is because economic growth is \u201clikely to surprise on the upside\u201d next year, which should benefit the sector.<\/p>\n

\u201cThis has been a feature for several years now, as investors have hedged the wrong risk (recession), whereas they should have been hedging for higher-than-expected growth. This is one of the reasons financials have done so well,\u201d he said.<\/p>\n

On top of this, banks are becoming much less regulated and much more efficient, which should be supportive even if interest rates fall.<\/p>\n

\u00a0<\/p>\n

Which markets will outperform?<\/strong><\/p>\n

For Rathbone\u2019s Thomson, the US remained the \u201cbarometer\u201d of global investor sentiment. While the market may be expensive, this does not mean it is overvalued, the veteran manager said.<\/p>\n

US companies are innovative, adaptable and have mission-critical growth, benefitting from higher research and development spending than many competitors, he said.<\/p>\n

\u201c[This] is why the US has $6trn companies and\u00a0Europe\u00a0has none\u201d.<\/p>\n

Investors shouldn\u2019t underestimate the structural growth opportunity in emerging markets, according to Artemis\u2019 Altaf.<\/p>\n

The manager is \u201ccautiously optimistic\u201d that China could have another strong year, as domestic \u201cnational champions\u201d look well-positioned to drive growth over the long-term. Additionally, policy measures are supportive, with fiscal and monetary easing creating a \u201cstrong picture\u201d for another rally.<\/p>\n

Across the market, corporate balance sheets have \u201cresilience which we\u2019ve not witnessed for years\u201d. In regions such as Latin America and Brazil, this has been supported by robust demand for commodities and low valuations.<\/p>\n

\u201cWhen you look at emerging markets, it’s not just about China or India. There is a broad range of themes that are really driving the upsurge,\u201d Altaf concluded.<\/p>\n","protected":false},"excerpt":{"rendered":"Veteran managers were divided on artificial intelligence and the regions that will offer the best opportunities. Markets experienced…\n","protected":false},"author":2,"featured_media":447746,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[51,16,15],"class_list":{"0":"post-693204","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-business","9":"tag-uk","10":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115888000029703976","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/693204","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=693204"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/693204\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/447746"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=693204"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=693204"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=693204"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}