As 2026 progresses, many investment managers are anticipating an environment of elevated risk, outsized opportunities and fast-paced change.
Potential Low-Expense Ratios on the Horizon
This year, traditional investment managers (who typically offer a variety of services and products) are generally bracing themselves for a low-expense ratio scenario. This will likely be driven by capital continuing to flow from mutual funds to ETFs due to the latter’s structure, which offers enhanced transparency, greater flexibility and improved tax efficiency at – broadly – lower costs.
Investors are increasingly manifesting a preference for low-cost funds, helping ETFs to capture more market share.
Private Capital Investment Expected to Rise
Experts such as Ben Waters, trader, know that despite a temporary performance dip in 2023, private capital has generated significant returns for investors over the last 10 years.
Investment activity in this sector is anticipated to increase in 2026, helped along by recent interest rate reductions by the European Central Bank and Bank of England, which is likely to foster an atmosphere that’s more conducive to investment activity and fundraising.
Growth of Private Credit
Private credit (along with other private capital assets) is expected to grow throughout 2026. This – as seasoned investors like Benjamin Waters, trader, understand – will be partly driven by the use of evergreen fund structures.
As the year goes on, it’s likely that investment management firms will expand into private credit products and services, particularly those related to retail distribution platforms.
Increasing Use of AI Tools
AI tools and technologies are being increasingly adopted across all industries, including investment management, and this is a trend that will no doubt continue throughout this year and beyond. These tools may be increasingly able to augment traditional portfolio management and enhance investment strategies.
The Importance of Good Portfolio Hygiene
Investors are widely advised to practice good portfolio hygiene. By regularly giving their investments and goals a check-up, investors are best positioned to make the most of – or protect against – market shifts and changing economic dynamics.
It’s a good idea for investors to review their target asset mix and, if necessary, consider rebalancing their portfolio to remain on track. As well as helping to mitigate risk, doing so can allow investors to take advantage of arising strategic opportunities.
For more information about investment trends in 2025, take a look at the embedded PDF.