From the impact of US trade tariffs to the continued growth of private markets, and from climate change investing headwinds to the artificial intelligence (AI) megatrend, there have been plenty of challenges and opportunities for investors to navigate over the past 12 months.
_Pensions Expert_ asked consultants and asset managers for their views on the continued dominance of US equities in investment portfolios, how to mitigate geopolitical risks, and whether private markets have been overdone.
AI continues to dominate as a theme, but opinions are split as to whether this will become a broader trend affecting more companies or poses a structural risk to the US economy. Meanwhile, private markets assets – particularly those that can help hedge inflation – will continue to be important.
## Concentration risk in US and global equity allocations
There are alternative ways to weight equity portfolios than by market capitalisation. The US dominance of global equity indices is not new, but has been pushed to new highs by gains in the largest stocks.
## Geopolitical risk in investment portfolios
Defined benefit schemes, supported by strong funding levels, have been taking profits and rebalancing their portfolios to reduce exposure to US equities.
## Top investment opportunity for 2026
Pension schemes with a longer-term view and a willingness to take on more risk may consider investing in emerging markets, where valuations are more attractive.
## Private markets supply and demand
Private equity and infrastructure investments have been a key area of focus for pension schemes in recent years, thanks to their ability to provide stable returns and hedge against inflation.
## Investment performance in 2025
| Index/asset class | 2025 performance |
| — | — |
| FTSE All-Share (UK) | +18.7% |
| S&P 500 (US) | +16.6% |
| Nikkei 225 (Japan) | +28.1% |
| CAC 40 (France) | +10.2% |
| DAX (Germany) | +22.3% |
| Hang Seng (China) | +30.6% |
| Gold (£ price) | +49.1% |
| Bitcoin ($ price) | -15.8% |
| Global bonds ($) | +8.4% |
| Private equity ($) | +11.8% |
_Notes: Global bonds performance is the Bloomberg Global Aggregate index; private equity is the MSCI All Country Private Equity index. Equity indices are shown in local currency terms._
