Investment trust managers tip emerging markets and the UK to lead returns in 2026.
Investment trust managers expect emerging markets and the UK to deliver the strongest returns in 2026, according to the Association of Investment Companies’ annual poll of fund managers.
The poll, conducted between 18 and 26 November 2025, surveyed 22 investment trust managers on their outlook for markets. Emerging markets topped the regional rankings with 38% of the vote, whilst the UK came second with 19%. China and Europe tied for third on 14%.
Almost half of respondents expected global stock markets to rise in 2026, with only 24% predicting falls. Two-thirds believed the FTSE 100 index would climb above 10,000 for the first time, compared with 24% who expected it to stay between 9,000 and 10,000 and 10% thinking it will fall below 9,000.
Information technology is the favoured sector for 2026 with 19% of the vote, followed by consumer staples and healthcare on 14% each. Meanwhile, the three themes managers cited as most promising were undervalued companies (33%), a reduction in interest rates (19%) and increased M&A activity at (14%).
Below, 15 investment trust managers give their take on what 2026 holds for their particular corner of the stock market.
UK equities
Job Curtis, portfolio manager of City of London Investment Trust, pointed out that UK-listed companies are undervalued compared to overseas equivalents. “On our estimates, UK equities are offering a total distribution yield (dividend plus share buyback) of over 5%, which is an attractive starting point for investors,” he said.
Merchants Trust manager Simon Gergel added there was “an exceptional opportunity at the moment in medium-sized UK higher yielding companies”. He attributed this to highly polarised markets and negative sentiment about the UK economy creating “a great opportunity set” for long-term investors.
Technology
The continued rise of artificial intelligence (AI) has been an overriding theme in 2025 and many expect this to continue next year. Ben Rogoff, fund manager of Polar Capital Technology Trust, described his team as “AI maximalists” who expected their bullish outlook to be periodically tested by volatility.
“AI is advancing at extraordinary speed; we expect 2026 to be the year when the capabilities of these models become unmistakable and the impact of AI increasingly impossible for investors across all sectors to ignore,” he added.
Global equities
Not all are bullish. James Harries, co-manager of STS Global Income & Growth Trust, warned: “We live in a world where valuations are elevated, markets are concentrated and economic uncertainty is animated. It has been a fantastic decade for investors, but as we enter 2026 the landscape has changed. Now is a time for caution – and a time to consider where tomorrow’s investment opportunities lie.”
However, CT Global Managed Portfolio Trust co-manager Paul Green said the macro backdrop and company fundamentals looked supportive for risk assets into 2026. He highlighted private equity trusts as particularly attractive, noting that many traded at meaningful discounts to net asset value with strong operating performance.
Lawrence Burns, manager of Scottish Mortgage, said his trust – with its focus on high-growth, disruptive companies, – allows investors to own a stake in the future of the global economy. “At a time when technological change is deep, broad and accelerating, we see that as more valuable than ever,” he said.
US equities
Felise Agranoff, portfolio manager of JPMorgan American Investment Trust, believes the US remains the standout market for long-term investors. She expects capital spending in artificial intelligence, infrastructure and energy to accelerate, with AI investment alone forecast to hit around $300bn a year.
“This spending doesn’t just benefit the big tech names – it ripples through sectors like power generation, logistics and manufacturing,” she said. “Rather than relying on a small group of large-cap names, we think returns will increasingly come from a broader set of companies and sectors.”
Jon Brachle, portfolio manager of JPMorgan US Smaller Companies Investment Trust, noted that US small-caps had underperformed larger peers in recent years but this had left them at historically attractive valuations and ready to benefit from renewed investment in manufacturing and infrastructure. He reckoned this creates opportunities for “selective, active investors”.
Emerging markets
Omar Negyal, portfolio manager of JPMorgan Global Emerging Markets Income Trust, is upbeat that China’s recovery is gaining traction as domestic investors returned and valuations remained appealing. India was starting to look more sensibly priced after years of exuberance, he continued.
“The real excitement, though, is in technology: firms across Taiwan, South Korea and China are powering the world’s AI and semiconductor supply chains, setting the stage for another wave of growth,” he added.
Dale Nicholls, portfolio manager of Fidelity China Special Situations, highlighted China’s structural strengths despite its cyclical challenges. The country continued to lead globally in manufacturing scale, innovation and technological upgrading, with its export profile moving away from the US towards other emerging markets.
“Rapid adoption of AI, highlighted by the success of domestic champions such as DeepSeek, demonstrates the ongoing strength of China’s innovation,” he said.
Charles Jillings, co-portfolio manager of Utilico Emerging Markets, is positive on the outlook for emerging markets as many countries, especially within Asia, continued to see strong GDP growth. He pointed out that infrastructure and utility assets are fundamental pillars for development in developing nations, “forming the backbone crucial for today’s emerging markets’ needs and tomorrow’s innovation”.
European equities
JPMorgan European Discovery Trust manager Jack Featherby said: “Europe’s economy looks set for a rebound, powered by falling interest rates, increased defence and infrastructure spending, and policy reform.
“The reshaping of US trade policy and Europe’s renewed push for self-reliance are already creating tailwinds for domestically focused small-caps, which we believe are the biggest beneficiaries of this new environment.”
He argued that valuations in Europe are “unusually cheap” and sees the biggest opportunities in industrials, technology and healthcare stocks, thanks to supportive capital investment and innovation.
Financials
Nick Brind, fund manager of Polar Capital Global Financials Trust, expects further merger and acquisition (M&A) activity and share buybacks among financials in 2026, driven by strong profitability, and a reduction in regulation that will allow banks in the US and Europe to return excess capital to shareholders.
Biotechnology and healthcare
Ollie Kenyon, senior director of RTW Investments, which manages RTW Biotech Opportunities, noted that biotech started 2025 with headwinds, some of which turned around in the second half.
“Policy uncertainty and regulatory noise weighed on sentiment in the first half, slowing capital flows and delaying deal activity. The second half saw those headwinds turn to tailwinds, with a strong recovery driven by renewed confidence, easing rate expectations, and a surge in M&A,” he said.
“We think now is an extremely exciting time to be in biotech, which is in the early innings of a potential multi-year recovery.”
China has become a major biotech player, he added, surpassing the US in total clinical trials and accounting for 30% of global trial starts compared with 35% for the US. Global pharma increasingly recognised Chinese innovation output, with one-third of all biotech assets licensed by big pharma in 2024 originating from China, making a local presence essential for global biotech exposure.
Gareth Powell, fund manager of Polar Capital Global Healthcare Trust, added that the wider healthcare space is poised to benefit from increased use of AI in the years ahead.
“Looking ahead, we see the healthcare sector as a prime beneficiary of AI-enabled technologies when it comes to furthering innovation, but also improving access and affordability, as waste and inefficiencies are reduced, allowing for more intelligent and prospective healthcare investment around the globe,” he finished.