The Global Investor: Expanding Your Market Horizons

As the global economy enters a new era, investors face both unprecedented challenges and extraordinary opportunities. By embracing diversified strategies, you can unlock long-term growth potential and navigate shifting dynamics beyond traditional U.S. markets.

Global Market Shifts Beyond the U.S.

In 2025-2026, market leadership is poised to broaden beyond U.S. dominance. While American equities continue to offer attractive returns, robust growth is emerging in Asia, Europe, and select emerging markets. Policy shifts, deregulation, and evolving trade agreements are reshaping economic landscapes worldwide.

• Expanding into Asia’s technology and renewable energy sectors
• Leveraging Europe’s rate-cut cycle and infrastructure drive
• Targeting high-growth emerging markets amid economic reforms
• Capitalizing on AI-driven productivity gains and digital transformation

By understanding these core themes, investors can design portfolios that capture cross-border innovation and momentum.

U.S. Market Leadership and Future Projections

The U.S. remains the world’s benchmark, with the S&P 500 projected to rise to 7,800 by 2026—a potential 14% gain. This optimism is fueled by a rare alignment of fiscal stimulus, monetary easing, and fiscal and monetary alignment that could spark renewed mergers and acquisitions activity, estimated to grow by over 30% in 2025.

Technology mega caps continue to drive returns, but expansion is underway. An estimated $3 trillion in AI capital expenditures is needed to deploy new data centers—less than 20% of those funds have been committed. This creates opportunities across real estate, credit markets, and private financing, where data center assets already yield double-digit returns.

Private Markets Resilience and Innovation

Despite a fundraising slowdown in 2024, private markets demonstrated remarkable resilience. Distributions to limited partners exceeded contributions for the first time since 2015, enhancing liquidity and confidence. Alternative structures like evergreen funds and continuation vehicles are attracting fresh capital.

• Fundraising dipped, but capital deployment rose by double digits
• LPs are increasingly prioritizing DPI as a key performance metric
• Infrastructure allocations support sustainable infrastructure investments
• Private credit emerges as yields on high-yield bonds and leveraged loans mature

Private equity deal values and counts are rebounding, especially in Europe, where sponsor-to-sponsor exits and P2P structures grew by over 65% in 2024.

Infrastructure and Energy Transition Opportunities

Infrastructure deal values climbed 18% year-on-year, driven by global trade expansion and the urgent need for clean energy. Port expansions, rail upgrades, and logistics hubs are in high demand as the world navigates a $33 trillion trade environment. Meanwhile, annual clean energy investment must reach $6.5 trillion by 2050 to meet net zero goals.

Managers are focusing on active ownership models at thematic intersections—combining data center power access with renewable energy inputs, for instance—to drive outsized returns and social impact.

Regional Outlook and Diversification

Diversifying across geographies can reduce portfolio volatility while capturing unique growth drivers. Below is a snapshot of projected equity returns and key risks for major regions in 2026:

North America outside the U.S. offers attractive valuations too, while emerging markets benefit from demographic tailwinds and infrastructure reforms.

Strategies for Investors in 2025 and Beyond

To thrive in this evolving landscape, consider the following allocation framework:

• Overweight U.S. equities to capture stable growth trajectories
• Increase private equity and private credit for diversification and yield
• Allocate to infrastructure and real estate focused on clean energy and data centers
• Maintain an equal weight in fixed income to mitigate volatility

This balanced approach positions portfolios to benefit from disinflation, anticipated rate cuts, and the transition to a lower-carbon economy.

Broader Macro and Risk Factors

Successful global investing requires a holistic framework linking asset values to cash flows, discount rates, growth prospects, and inflation dynamics. Keep a close eye on geopolitical developments, from tariff disputes to shifting trade policies, as these can rapidly alter risk premiums and currency valuations.

Fixed income markets are expected to offer value in early 2026, with government bond yields retreating below 4% midyear before edging higher by year-end. Meanwhile, real estate markets could rebound on the back of lower financing costs and renewed cross-border capital flows.

Above all, maintain flexibility. Leverage thematic research, stay informed on policy changes, and partner with experienced managers to navigate this dynamic environment. By embracing global diversification, you can unlock new sources of growth and resilience, ensuring your portfolio is prepared for whatever the future may bring.