Portfolio perspectives for 2026
Written by David Kandziora, Lead Portfolio Manager, Alvarium Wealth.
If you’ve read the excellent macro chapters from my colleagues at Salt Funds, you’ll be under no illusions that 2026 is unlikely to be a year of plain sailing for investors.
From underwhelming growth prospects to unpredictable political leaders, there will inevitably be some strong headwinds in the 12 months ahead.
That said, the case for being invested, and staying invested across the long term, remains extremely compelling. Even more so in a world of falling interest rates where cash and cash-like assets are less competitive compared to an appropriately diversified combination of traditional and alternative assets.
Looking ahead, we anticipate that global investors may rotate out of certain positions as market conditions evolve. US equities remain expensive by historical standards. This was recently highlighted by UBS, the Swiss banking giant, which declared the S&P 500 to be trading at 22 times 12‑month forward earnings, ranking in the top 5% of valuations since 1985[1].
That said, robust earnings momentum, a supportive economic backdrop, and the prospect of further US Federal Reserve rate cuts provide meaningful tailwinds. In our view, these factors argue against materially reducing US exposure at this stage. Instead, we continue to see merit in maintaining allocations while selectively seeking complementary opportunities elsewhere.
At the time of writing, we are actively exploring alternative sources of growth to complement this core positioning. This includes opportunities in emerging markets, where structural trends may offer attractive return potential, as well as diversifying into specialised strategies.
Our diversification efforts extend to investigating global macro hedge funds and event‑driven approaches, such as convertible debt arbitrage. We are also evaluating factor‑based strategies, including momentum, to broaden the range of a portfolio’s return drivers and to enhance resilience across different market environments.
Together, these initiatives are designed to create an all-weather portfolio which balances stability with innovation, anchoring portfolios in established markets while seeking new avenues for growth.
As ever, your quarterly fund manager commentary document, which we send to you via NZX, will explain key investment decisions that we take on your behalf.
Our investment philosophy: Overarching statement
With that in mind, this feels like a good time to remind you of our overarching investment philosophy when we manage our clients’ investments. In other words, the mindset and the focus that we adopt as prudent custodians of our client assets.
In terms of the core belief that guides our investment team, it is the idea that investing is the best way to grow and preserve wealth over time. Let’s explain why we place so much weight on the role that investing can play in long-term financial planning.
If we look at the S&P 500 for example, a US stock index featuring 500 of the world’s most valuable companies by market capitalisation, there’s a clear trajectory upwards over 50 years. That trajectory has been uneven because markets never move in straight lines, but over time, the growth story is compelling. It’s an isolated example because it relates to a single equity index and portfolios will typically hold a diversified range of assets. But on a simple level, it evidences the long-term potential of putting your cash to work in financial markets, rather than leaving it in Term Deposits (depending of course on your personal objectives, circumstances, and appetite for risk).
Keeping you informed
Throughout the year, we’ll update you if we make a significant trade or reallocation of assets. In those instances, we will aim for our client communications to explain clearly why we decided to take action, and where relevant, what we opted to do with any subsequent sale proceeds.
With that in mind, here’s an overview of trades that we recently executed on behalf of our clients. Please note: If you are invested with us and don’t see these trades in your valuation statement, it may be because you are invested in a different strategy to the one in which the trade was made. For more information, please speak to your Adviser.
Our trading decisions in the fourth quarter of 2025 were guided by the following overlapping factors:
- We act as proactive custodians of your assets.
- We remain unconstrained by any single investment style, past practices, or manager preferences.
- We trade only when we believe it will add long-term value to your portfolio.
In line with these principles, our recent actions included:
- Stewart Investors Global Emerging Markets Fund: We exited this fund following the departure of several key investment personnel and concerns around portfolio construction and risk management.
- Bronte Capital Ganymede Fund: The fund’s style drift meant it no longer provided the lower market correlation and downside protection consistent with its original mandate.
- Platinum International Fund: After a takeover and team change, the portfolio became more concentrated and volatile, diverging from its initial investment style. We also noted concerns about the introduction of performance fees that were not aligned with the fund’s asset base and its benchmark.
The proceeds from these exits have been redeployed to existing managers and exposures where we hold higher conviction, ensuring that capital remains deployed in the market and aligned with strategies which we believe will deliver sustainable long‑term value.
Additionally, we are reviewing fees relative to performance and the tax‑efficiency of our product suite. We will continue to keep you informed of any significant changes to our strategies.
In summary
As we enter 2026, we recognise that investors face a challenging environment marked by modest growth prospects, political uncertainty, and elevated equity valuations. Yet the long‑term case for staying invested remains compelling, particularly in a world of falling interest rates where diversification across traditional and alternative assets is key.
Our recent portfolio adjustments reflect this sentiment: exiting funds that no longer align with their mandates, and redeploying capital to managers and strategies where we hold higher conviction.
At the same time, we are actively exploring complementary opportunities in emerging markets, specialised strategies, and alternative approaches to ensure portfolios remain resilient and positioned for sustainable long‑term value.
[1]Source: https://www.ubs.com/global/en/wealthmanagement/insights/marketnews/article.2583600.html
Photo credit: Fausto Garcia-Menendez for Unsplash
