Insight

The Big Picture: Global asset allocation 2026 outlook

November 13, 2025
Global Market Strategist, EMEA
Paul Jackson
Global Market Strategist, EMEA
The Big Picture: Global asset allocation 2026 outlook

We expect the global economy to accelerate during 2026. Coupled with Fed easing and a weaker dollar, we expect this to favour cyclical assets. We reduce government bonds and investment grade credit to slightly Underweight within our Model Asset Allocation, while raising high yield to Neutral. We add AAA-rated CLOs (collateralised loan obligations) to our framework, preferring it to cash within the cash equivalents category. Among regions, we continue to favour emerging market and European assets.

Model asset allocation 

In our view: 

  • Commodities should benefit as the global economy improves. We stay at the Maximum.
  • Real estate (REITS) may benefit as rates fall and economies accelerate. We remain Overweight.
  • Bank loans offer an attractive risk-reward trade-off. We stay at the Maximum.
  • Corporate high yield (HY) spreads are tight but may remain so. We increase to Neutral.
  • Government bond yield direction will be mixed. We reduce to slightly Underweight.
  • Corporate investment grade (IG) has a similar profile to government bonds. We reduce to Underweight.
  • Equities have rebounded and we remain Underweight (Underweight the US, Overweight non-US).
  • Cash equivalents Underweight, with the newly introduced AAA-rated CLOs preferred to cash.
  • Gold may be helped by a soft dollar but geopolitics are improving, and it is expensive. We remain at Zero.
  • Regionally, we favour Europe and EM.
  • US dollar is likely to weaken and we maintain the partial hedge into JPY.

Our best-in-class assets (based on 12m projected returns)

  • China equities
  • Japan REITS
  • Industrial commodities
  • European bank loans
Figure 1: Projected 1-year return versus risk for global assets
Figure 1: Projected 1-year return versus risk for global assets

Based on local currency returns. Returns are projected but standard deviation of returns is based on 5-year historical data. Size of bubbles is in proportion to average 5-year pairwise correlation with other assets (hollow bubbles indicate negative correlation). Cash is an equally weighted mix of USD, EUR, GBP and JPY. CLOs is AAA-rated CLOs. Neutral portfolio (“Neutral Port.”) weights shown in Figure 3. As of 31 October 2025. There is no guarantee that these views will come to pass. See Appendices for definitions, methodology and disclaimers.
Source: Credit Suisse/UBS, ICE BofA, JP Morgan, MSCI, S&P GSCI, FTSE Russell, LSEG Datastream and Invesco Strategy & Insights

Investment risks 

The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested. 

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