Institutional investors remain optimistic for 2026 despite economic and geopolitical strains, says Natixis IM
19 NOV, 2025
By Joanna Piwko from RankiaPro Europe
Institutional investors are approaching 2026 with cautious optimism, even as geopolitical tensions, trade uncertainty and macroeconomic disruption continue to shape the global landscape, according to Natixis Investment Managers’ 2026 Institutional Outlook.
Geopolitics tops investor concerns
Geopolitical risk remains the leading economic threat for investors worldwide, cited by 49% globally and 60% of respondents in Spain—well ahead of concerns about a tech bubble (40%) or recession (30%). With unpredictable tariff policies, eroding global security norms and China’s growing influence, 73% of global investors see political dysfunction as a rising risk to market stability.
Cautious views on global growth
Despite the strong resilience of markets in 2025, when most major indices posted double-digit returns for a third consecutive year, 74% of institutions believe markets are nearing a correction. Two-thirds fear slowing growth may be an early sign of recession, and investors expect weak performance from consumer sectors in 2026.
Active management, diversification and new opportunities
Volatility is expected to rise across asset classes, yet investors are identifying pockets of opportunity:
- 75% plan to reduce or maintain exposure to U.S. equities, showing declining enthusiasm for the U.S. market.
- Asia-Pacific (89%) and Europe (85%) are the preferred equity regions for increased or stable allocations.
- Heightened geopolitical tensions are boosting interest in defense, with strong optimism in Europe (77%) and North America (81%).
- Half of global investors now believe India will overtake China as the most attractive emerging market.
Cryptocurrencies are also gaining traction: 33% now invest in crypto, up from 18% last year, and nearly all current investors plan to maintain or increase their exposure.
Sustainableinvesting still seen as a source of alpha
Despite scrutiny and political backlash, ESG remains relevant. Notably, 80% of Spanish institutional investors believe ESG strategies can generate alpha—far higher than the 58% global average. Most still favor integrating sustainability into fundamental analysis, though 73% in Spain say ESG has been publicly deprioritized.
AI: opportunity with risks
Institutions remain optimistic about AI’s long-term potential, with 65% expecting it to drive market growth in 2026. Yet concerns are rising: 46% fear an AI bubble, and over a third expect it to burst next year. Many anticipate that rapid AI development will increase market concentration and that slowing Capex investments could threaten growth.
AI is already reshaping internal processes: 68% say it helps identify new investment opportunities, and nearly half use it to detect portfolio risks. Still, 64% worry that replacing junior roles with AI could hinder long-term talent development.
