The organisation is among a raft of institutions setting out asset allocation views for 2026. It comes down on the side of those suggesting an underweight stance on the dollar, and prefers global equities outside the US.

Investors should embrace diversification next year, embrace AI “thoughtfully,” be underweight the US dollar and overweight global equities outside the US, according to an outlook from Cambridge Associates, a US-headquartered investment firm.

These views are among several other themes and predictions that CA makes for next year. It also says investors should be overweight developed market small-cap stocks; overweight Latin American equities; revisit private portfolio exposures amid a morphing market; moderate their commitments to seed-focused venture capital strategies; lean into hedge funds; be underweight public corporate credit; and move towards private asset-based finance strategies, and real asset themes. And finally, investors should go overweight California carbon allowances.

“Our economic outlook is anchored by several key drivers. First, easing global financial conditions and reduced tariff uncertainty should support consumer and business activity worldwide,” CA said in its 38-page report.

“Second, increased investment in artificial intelligence (AI) infrastructure, along with moderate fiscal stimulus in the US, euro area, and potentially China, should further bolster growth.

“Third, offsetting these positives, a weaker US labour market, slowing economic momentum in China, and the fading boost from tariff front-running are likely to limit upside surprises. Key risks to our outlook include a meaningful deterioration in the US labour market – though this appears unlikely – AI enthusiasm fading, and potential reductions in US tariff rates resulting from US Supreme Court decisions,” it said. 

Wealth management firms, economists, outsourced chief investment office (OCIO) businesses are setting out their views and asset allocation preferences for 2026, as is typical for this time of year. There appears to be a certain divergence between calls to shift some assets out of the US to the rest of the world, and those who say that despite concerns about a weakening dollar and the impact of tariffs, the US is their preferred market.

“Global ex US equities have outperformed US equities by 4.4 percentage points (ppts) in local currency terms so far in 2025 and by 11.2 ppts in US dollar terms. We believe that conditions are in place to see that outperformance trend continue in 2026 and we recommend that most investors modestly overweight global ex US equities from US equities. This view is founded on attractive relative valuations, improving regional growth catalysts outside the US, and rising concentration within US equities. 

“There are two facets to the valuation proposition of overweighting global ex US equities from US equities, the first of which is the still-elevated valuation of the US dollar. As detailed earlier in this outlook, we expect the dollar to decline further in 2026. Despite some depreciation in 2025, the dollar remains 32 per cent above its median real valuation based on current equity weights. While a declining dollar does provide some earnings uplift for US equities via the translation impact on their non-US earnings, the overall net impact should still be a headwind for the performance of US dollar-denominated assets when translated into other base currencies,” CA added.

The firm has explored a variety of issues related to asset allocation. In 2023, it addressed how wealthy families calculate the costs involved in running their wealth, and looked at typical ranges for annualised investment and non-investment costs and their allocation between a family office and third-party service providers. It showed, for example, that the total cost is usually more than 100 basis points, or 1.0 per cent, of investable assets. CA shows that the range is between 115 bps and 175 bps. 

Four years ago, the firm opened an office in Hong Kong, adding to its footprint in Singapore and Beijing.