Global financial institutions are heading into 2026 with a mostly risk-on stance, despite concerns around valuations, geopolitics and public debt, according to Natixis Investment Managers’ latest global financial institutions (GFI) Market Outlook.
Strong market performance in 2025 has reinforced investors’ reluctance to de-risk, according to Julien Dauchez, head of client solutions group, and Cecile Mariani, MD, head of global financial institutions (International) at Natixis.
Many institutions that stayed cautious last year missed parts of the rally, and that experience has fuelled the fear of missing out (Fomo), making them reluctant to step away from markets again, even as risks remain elevated.
For 2026, institutions are mostly expecting an extension of existing market trends rather than a sudden change. Despite ongoing talk of an AI bubble and stretched valuations, most remain invested, with Fomo proving stronger than worries about calling the market top. However, institutions expect divergence within AI, , as attention shifts from hype to earnings delivery and separates winners from losers.
Equities remain favoured across regions despite high valuations. Few institutions are willing to bet against US stocks, while European equities have seen the strongest improvement in sentiment compared with the previous outlook.
In the US, the focus is on domestic manufacturing and the reshoring of critical supply chains. Across Asia, the investment story is all about AI, along with the chips, data centres and infrastructure needed to support it. Europe, meanwhile, is leaning into energy security, defence and the green transition rising to the top of the agenda.
In fixed income, institutions are focused on locking in yields. European investment grade credit and short-duration government bonds are favoured, while emerging market debt stood out as a high-conviction allocation. Private credit remains attractive, though investors are selective. Cash, meanwhile, remains one of the least favoured allocations.
However, institutions also remain alert to downside risks, including earnings disappointment in technology, inflation returning and geopolitical escalation. The survey suggested that most investors are choosing to stay invested, prioritising diversification and selectivity over wholesale risk reduction, shared Mariani and Dauchez.
