Global Sovereign Asset Management Study 2026: Five Themes Shaping the Future

Hi, I am Catherine Chan, welcome to the 2026 Global Sovereign Asset Management Study. This year’s study reveals key topics that sovereign investors are reassessing to position for the future. Assumptions about portfolios, returns, and risks are all being looked at through a new lens.

Resilience is the focus of our first theme. Institutions are building portfolios designed to withstand uncertainty, while also strengthening governance, operations, and access to assets.

Second, the return environment is changing. Sovereign investors are looking beyond broad market exposure, increasing allocations to infrastructure and private credit while focusing on liquidity and long-term discipline.

Third, ETFs are playing a growing role. From accessing new asset classes to supporting portfolio transitions and tactical positioning, or using them as core building blocks, ETFs are becoming increasingly important investment tools.

Fourth, artificial intelligence is reshaping both investment opportunities and operations. Whilst AI offers significant potential through infrastructure and productivity gains, investors are balancing those opportunities against risk management, governance and security.

Finally, central banks are strengthening resilience through greater diversification, expanding into new asset classes, increasing gold allocations, and reviewing how reserve assets are managed and safeguarded.

These five themes highlight a new era of portfolio construction, technology, and long-term investing. Download the full study from our website.

As we look across equity markets so far this year, the Nasdaq-100 has put on a remarkable display of resilience. It has moved to new all-time highs as of 31 May and is up 20.45%¹ year-to-date. However, this headline number masks the highly volatile path it has been on in 2026.

Performance has varied by sector. There has been strength in the Technology sector, specifically Semiconductors, which has been fueled by strong capital expenditure in the build out of artificial intelligence infrastructure. Lack of exposure to Financials has also contributed to performance as interest uncertainty has weighed on the sector.

Conflict between the U.S. and Iran created much volatility as the price of oil rose dramatically through the month of March. The increased cost of energy has created concern for the potential of increased inflation in the near future. Although employment in the U.S. has remained stable, future inflation fears has caused interest rates to remain higher and may have an impact on future Federal Reserve monetary policy.

Although there is still much uncertainty in the market, earnings growth has been a focus for many Nasdaq-100 investors. The Nasdaq-100 saw 22%¹ year-over-year earnings growth in 2025, and analysts are expecting growth of 39%¹ for 2026. Ultimately, while macroeconomic and geopolitical factors remain volatile, the innovation and fundamental growth of Nasdaq-100 companies continue to contribute to greatly to its performance.

Data Source:

¹  Bloomberg L.P. as of 31 May 2026

Quick take: Private vs. Public Credit: Why AAA CLOs Now 

Hi, I am Derek Fin, Head of APAC private credit business strategy and development.

Private credit has been in the headlines more recently and often for the wrong reason, but the important part is that those headlines are not about all private credit. They focus on one specific segment, particularly BDCs (Business Development Companies).

BDCs are illiquid and below investment grade. That’s very different from the investment grade, more liquid part of the private credit market.

All the concerns around liquidity, valuations, and credit risk are less relevant to the liquid, investment grade part of the market.

These concerns do matter, but they are not universal across all the private credit.

In this video, we are going to focus on investment grade, AAA-rated CLOs, and why we think an allocation to both the US and Europe both look attractive.

Why AAA CLOs ?

Given all those concerns around BDCs, AAA CLOs don’t have those issues.

CLOs are actively traded in the secondary market, they are mark to market, and are investment grade. 

At the same time, AAA CLOs historically offered higher spreads¹ compared to other similarly rated investment grade fixed income.

¹Source: Invesco. Past performance does not predict future returns. All data as of March 31, 2026

From a portfolio construction stand point, AAA CLOs are floating rate, and have limited exposure to interest rate volatility. So they help diversify away from traditional fixed income risk.

That’s why many of our clients use the asset class as a cash plus type of allocation, or as a diversifier within their core fixed income allocation.

Why European AAA CLOs?

Similar to the US market, all the characteristics of European CLOs also apply to the European market. There’s an active secondary market, daily mark-to-market pricing, and AAA down to AA and single A European CLOs have historically have never experienced a default ².

²Source: Moody’s Ratings, Structured Finance: Impairment and loss rates of global CLOs: 1993-2024 as of June 2025. Past performance does not predict future returns.

So why blend European AAA CLOs with US exposure rather than picking just one? Europe adds diversification, there is different issuer, different sectors, and different underlying economies.

On top of that, European CLOs have historically offered even higher yields than US AAA CLO markets³. So you’re both adding diversification and picking up yield at the same time.

³Source: Bloomberg, JPM, Invesco, returns may increase or decrease as a result of currency fluctuations. Data as of 31 March 2026. Past performance does not predict future returns.

Why CLO managers matter?

In traditional asset classes, the gap between a good manager and an average one is often quite narrow. In private markets the gap can be much wider.

That’s matters in AAA CLOs our clients are more focus on high quality income and cash plus exposure. This asset class is ultimately about liquidity and downside protection.

So when you’re allocating to AAA CLOs or anywhere in private credit, choosing a manager with a strong track record , deep expertise in the asset class, and proven performance through cycles is essential.

For investors who want to earn income and stay defensive, we think AAA CLOs are one of the more interesting areas of the market today.