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Key takeaways
- Despite higher volatility and some elevated risks, many areas of the global financial market appear fairly valued, creating potential investment challenges.
- We suggest investors cast a wider net, looking for deeper diversification across markets, while also capitalizing on market turnarounds in spaces such as municipal bonds and private real estate.
- We also think some market segments have room for further upside, including U.S. large cap equities, infrastructure and private credit.
Explore the investment outlook by section
- Section 1: Casting a wider net: five themes for 2026
- Section 2: The economy and markets: key points to know
- Section 3: Asset class heat map
- Section 4: Five portfolio construction themes
- Section 5: Our best investment ideas
Casting a wider net: Can investors branch out when so much is priced in?
Saira Malik, Chief Investment Officer
What do March Madness and the Oscars have in common? Both are beloved rites of spring that have cast a wider net to enhance their appeal and keep up with evolving trends and interests. Over the past few decades, the U.S. NCAA men’s and women’s basketball programs expanded their championship brackets from 48 to 68 teams. The Academy Awards, meanwhile, added a golden statue for Best Animated Feature in 2002, increased Best Picture nominations from five to 10 in 2009 and this year literally “cast” a wider net for winners by introducing a new category for achievement in — yes, casting.
Breadth of opportunity is a prominent theme in global financial markets, too, but with more at stake than a busted bracket in the office betting pool or a snubbed supporting actor on Hollywood Boulevard. Building long-term portfolios designed to maximize return potential while effectively managing risk has always been challenging, and never more so than during periods of sweeping economic, political and technological change.
Yet despite today’s increased volatility, markets remain efficient overall, with expected outcomes largely priced in — evidenced by tight credit spreads, a crowded artificial intelligence (AI) trade and full equity valuations, among other indicators. This complicates the quest for relative value and durable upside, leaving some investors hard pressed to identify the next asset classes or sectors best suited to take on the role of portfolio diversifier, income generator or return maximizer.
Nor is there any guarantee the winners will align with conventional wisdom. Like a Cinderella team upsetting the #1 seed or a dark horse nominee pulling the red carpet out from under the sentimental favorite, success has a way of defying the oddsmakers.
By the same token, optimal portfolio construction doesn’t mean every theme, sector or subsector previously favored needs to be abandoned. Even in categories that have recently outperformed, where valuations appear stretched or potential near-term catalysts seem fully reflected in current prices, compelling opportunities can still be found.
Case in point: U.S. assets, which some institutional investors have begun to de-emphasize in their global allocation strategies amid tariffs and geopolitical upheaval. Those concerns notwithstanding, we’re still able to find compelling value in select U.S. exposures based on sound fundamentals and structural advantages. These include ways to benefit directly from the ongoing AI boom (via large cap growth equities) and through second-derivative AI-related investments (like power generation and infrastructure assets).
In fixed income, we favor higher-yielding sectors with healthy credit profiles, such as senior loans and preferred securities. And we continue to stand by two favored asset classes whose recent rebounds are hitting their stride: municipal bonds and private real estate. Lastly, among alternative investments, we like certain areas of private equity and private credit, specifically strategies where rigorous underwriting helps mitigate risk.
We explore these and other insights in the pages that follow. Through our “Five portfolio construction themes” discussion, updated heat map and best ideas across asset classes, we’re pleased to share how we’re casting our own wider net as we head into the second quarter of 2026 and beyond.
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Synchronizing (and improving) global growth.
The economy and markets
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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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Conversations with our clients and our own EQuilibrium investor survey show many investors shifting assets away from the U.S.
Five themes for 2026
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We suggest a barbell approach balancing growth-oriented U.S. tech/AI exposure with defensive positioning in dividend growers and listed infrastructure, both offering 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.
