FERI Annual Outlook 2026: “Politics drives markets”

From FERI's perspective, the transition to a multipolar world order has significant implications for asset allocation. The multi-asset specialist is focusing primarily on the consequences of ongoing political disruption in the US and, in particular, on the risks to the independence of the US Federal Reserve (Fed). “We deliberately chose the headline ‘Politics drives markets’ for our annual outlook for 2026,” explains Dr. Marcel V. Lähn, CEO and Chief Investment Officer of FERI. “A broad-based multi-asset approach with flexible allocation remains an effective strategy for dealing with the complexity of the market environment and creating added value for our clients.”

A significant change in the capital market environment is the new “economic nationalism”: economic and trade policy is increasingly being used to enforce national interests and goals, even in confrontation with other countries. This forces companies to follow the primacy of political decisions and adapt their strategies and business models accordingly. Conscious and flexible selection by region, sector, and individual stocks is therefore of crucial importance.

The drastic increase in US import tariffs will weigh on global growth in 2026. At the same time, however, there are also positive factors, explains Axel Angermann, Chief Economist at FERI: "The fact that inflation in most countries is within the central banks' target range opens up scope for a more expansionary monetary policy. Fiscal policy will also provide positive impetus, even if the overall very high level of (government) debt gives cause for concern. Massive investments in artificial intelligence should also have a supportive effect."

The US remains the first port of call for professional equity investors

In the equity sector, FERI believes that the US remains the core region due to its high innovative strength. However, investors should keep an eye on the already high valuations and inflation trends as risk factors. According to FERI, emerging market investments will become more attractive in 2026. In Europe, on the other hand, there is still a lack of willingness and ability to fundamentally realign economic policy. The continent is at risk of falling further behind in global competition. On the global bond markets, monetary easing is likely to cause a further steepening of the yield curves. Long-term government bonds are therefore only attractive in certain phases.

The ongoing disruptive US policy will continue to prompt investors to seek alternatives to the US dollar. The greenback remains the world's most important reserve currency, but could depreciate further in 2026. Active currency management therefore remains essential for globally active investors. For this reason, gold also retains its strategic appeal as an asset class for professional investors, despite possible setbacks.

FERI will continue to actively use alternative asset classes such as volatility strategies, private markets, and hedge funds in 2026 to achieve positive performance contributions. Increasing adoption and market maturity are also driving rising demand for Bitcoin, while stablecoins are also gaining relevance. Digital assets are therefore an asset class that is becoming increasingly established and is an integral part of FERI's investment universe.

“Fundamentally, structural determinants require maintaining a real asset-oriented asset allocation with a focus on resilience and active risk management,” says Lähn, summarizing FERI's view. Scenario thinking will remain essential in 2026 in order to adequately reflect the complexity of the capital market environment in a multi-asset portfolio, respond appropriately to possible changes in the market environment, and take geopolitical developments into account.