Model portfolios continue to grow in scale and influence, with asset managers refining how they build and manage diversified portfolios. The Invesco 2026 Models Benchmarking Study analyzed 1,908 models across US and global strategies, offering a detailed look at how portfolio construction is shifting in today’s market. We utilized Invesco's proprietary tools to provide a risk factor lens across model portfolios and present example case studies to encourage ideas and discussion.
Here are six key takeaways from our benchmarking study.
1. Equity risk continues to dominate
Across all model types, equities remain the main driver of risk. It ranges from 52% in US conservative models to 96% in global aggressive models. Despite more favorable conditions for fixed income, such as higher yields and lower index duration, portfolios retain a heavy equity bias, both by allocation and as the primary source of total risk.
2. Mixed picture relative to total risk
Forward-looking return capital market assumptions (CMAs) expectations show a weaker relationship to portfolio risk than in our 2025 study years.1 Instead of higher risk leading to meaningfully higher expected returns, the 2026 outlook shows a flat to downward sloping trend. This shift reflects lower expected returns across asset classes and highlights the importance of more precise portfolio construction.
3. Leaning away from large-cap and into the IT sector
Aggressive and moderately aggressive US models (with more than 75% of exposure in US-domiciled securities) are overweight the IT sector and have shown a tilt away from large-cap exposure relative to their benchmarks.
4. No evidence of diversification away from the US
Despite a narrative of ex-US allocations increasing, asset manager models show virtually no signs of such a shift. The year-over-year change in US equity allocations went up by 0.2%.
5. Material uptick in active ETFs
Active ETF usage increased by an average of 3.9% year over year, taking share from active mutual funds and index ETFs. Active ETFs also saw their fee budget increase by 6% year over year.
6. Use ETFs as portfolio completion tools
Using case studies, we offer solutions to:
- Enhance income efficiency and portfolio resilience while maintaining a conservative risk profile
- Broaden return drivers through international and factor diversification
- Redistribute equity risk more evenly across sectors and styles while maintaining the portfolio’s overall risk profile
How Invesco can help
We understand there’s a stringent process for determining asset allocations, factor exposures, and sector selection that ultimately leads to ETF selection for both active and index-based strategies. It isn’t as simple as picking the cheapest product in a category. We can work with model portfolio providers to determine the best product to fit your goals. That means assisting in identifying deliberate and potentially unintended factor tilts while highlighting the impact on total risk, fees, and forward-looking potential returns before and after adding an ETF.
Read the complete Invesco 2026 Models Benchmarking Study
