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Investment Outlook

2026 annual outlook: Above and below the radar – understanding today’s markets

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Section 1: Above and below the radar: Five themes for 2026

Saira Malik, Chief Investment Officer

Sometimes what you get isn’t what you see — even if what you get is all around you. That’s certainly true for radar, one of the 20th century’s most important innovations. Originally an acronym coined by the U.S. Navy in 1940, RADAR (Radio Detection and Ranging) is a system of high-frequency radio wave transmitters and receivers that can locate and track objects not visible to the naked eye.

Radar has evolved beyond its military role to become a versatile, ubiquitous technology so ingrained that we may take its myriad applications for granted: air traffic control, weather forecasting, automotive safety and remote health care monitoring, to name a few. Even answering sports trivia questions like who threw the fastest pitch in baseball history is possible only because of the radar guns installed in every Major League ballpark.

Investing requires radar-like capabilities, too. As investors, we continually track economic, market and issuer fundamentals to identify compelling opportunities and salient risks. This can be challenging, especially in today’s environment. Solid but slowing global economic growth, combined with persistent inflation, is muddling the monetary policy outlook. Geopolitical and trade tensions, as well as lingering impacts from missing or delayed data during the U.S. government shutdown, are also jamming the transmission of investment signals.

That said, two primary pulses are detectable: high equity valuations and tight credit spreads. Still-elevated levels of cash on the sidelines can’t be ignored, either. The real value of that cash, however, is being eroded by a gradual drop in short-term interest rates and the presence of stubborn inflation. Where might investors want to put cash to work? We see two main categories of opportunity:

• Above the radar. These allocation ideas are a continuation of previously established themes. For example, despite their prominent profile and robust returns, U.S. large cap equities still look compelling, especially compared to their non-U.S. peers. Similarly, private credit has been attractive for some time, and while we’re cognizant of some risks, select opportunities in this asset class remain.

• Below the radar. A deeper dive reveals areas where investors may not be looking for, or even be aware of, potential portfolio candidates. Among the possibilities are alternative credit instruments like senior loans and collateralized loan obligations (CLOs), and more esoteric options such as private investment grade and asset-backed finance.

Additionally, we continue to scope out asset classes that may not fit neatly into above- or below-radar buckets but whose appeal is based on nascent turnarounds: real estate, private equity and municipal bonds.

Our “five themes for 2026” provides a more detailed readout of our preferences for (1) diversified U.S. asset class exposure; (2) alternative credit and private equity investments as core allocations; (3) municipal bonds, one of our long-favored asset classes; (4) real estate, which is on the rebound; and (5) “second derivative” opportunities extrapolated from booming AI and energy demand.

Radar analogy notwithstanding, the conclusions offered here are more than blips on a screen. They’re our highest-conviction investment ideas, intended to help navigate market opportunities and risks, whether readily apparent or hidden from view. We invite you to consider them as you find ways to build and adjust portfolios in 2026.

Continue reading

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Our cross-asset class views indicate where we see the best relative opportunities within global financial markets.
Asset class heat map
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One of the main questions on investors’ minds is whether the AI-driven U.S. equity surge has created a bubble.
Five themes for 2026
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We suggest a barbell approach balancing growth-oriented U.S. tech/AI with more defensive positioning in dividend growers and listed infrastructure, both of which offer income and potentially lower volatility.
Best ideas across asset classes
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Endnotes

Sources

All market and economic data from Bloomberg, FactSet and Morningstar.

This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy, sell or hold a security or an investment strategy, and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with his or her financial professionals.

The views and opinions expressed are for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions, legal and regulatory developments, additional risks and uncertainties and may not come to pass. This material may contain “forward-looking” information that is not purely historical in nature.

Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. Any changes to assumptions that may have been made in preparing this material could have a material impact on the information presented herein by way of example. Performance data shown represents past performance and does not predict or guarantee future results. Investing involves risk; principal loss is possible.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. For term definitions and index descriptions, please access the glossary on nuveen.com. Please note, it is not possible to invest directly in an index.

Important information on risk

All investments carry a certain degree of risk and there is no assurance that an investment will provide positive performance over any period of time. Equity investing involves risk. Investments are also subject to political, currency and regulatory risks. These risks may be magnified in emerging markets. Diversification is a technique to help reduce risk. There is no guarantee that diversification will protect against a loss of income. Debt or fixed income securities are subject to market risk, credit risk, interest rate risk, call risk, tax risk, political and economic risk, and income risk. As interest rates rise, bond prices fall. Investing in municipal bonds involves risks such as interest rate risk, credit risk and market risk, including the possible loss of principal. The value of the portfolio will fluctuate based on the value of the underlying securities. There are special risks associated with investments in high yield bonds, hedging activities and the potential use of leverage. Portfolios that include lower rated municipal bonds, commonly referred to as “high yield” or “junk” bonds, which are considered to be speculative, the credit and investment risk is heightened for the portfolio. Credit ratings are subject to change. AAA, AA, A, and BBB are investment grade ratings; BB, B, CCC/CC/C and D are below-investment grade ratings. As an asset class, real assets are less developed, more illiquid, and less transparent compared to traditional asset classes. Investments will be subject to risks generally associated with the ownership of real estate-related assets and foreign investing, including changes in economic conditions, currency values, environmental risks, the cost of and ability to obtain insurance, and risks related to leasing of properties. Investors should be aware that alternative investments including private equity and private debt are speculative, subject to substantial risks including the risks associated with limited liquidity, the use of leverage, short sales and concentrated investments and may involve complex tax structures and investment strategies. Alternative investments may be illiquid, there may be no liquid secondary market or ready purchasers for such securities, they may not be required to provide periodic pricing or valuation information to investors, there may be delays in distributing tax information to investors, they are not subject to the same regulatory requirements as other types of pooled investment vehicles, and they may be subject to high fees and expenses, which will reduce profits. Alternative investments are not appropriate for all investors and should not constitute an entire investment program. Investors may lose all or substantially all of the capital invested. The historical returns achieved by alternative asset vehicles is not a prediction of future performance or a guarantee of future results, and there can be no assurance that comparable returns will be achieved by any strategy. Responsible investing incorporates Environmental Social Governance (ESG) factors that may affect exposure to issuers, sectors, industries, limiting the type and number of investment opportunities available, which could result in excluding investments that perform well.

Nuveen, LLC provides investment advisory services through its investment specialists.

This information does not constitute investment research as defined under MiFID.

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