HSBC Asset Management, the investment management arm of the HSBC Group, has released its 2026 Investment Outlook entitled “Role Reversal,” highlighting how asset classes are shifting roles, with broader equity opportunities beyond recent leaders and a need to diversify traditional portfolio stabilisers.

HSBC Asset Management expects 2026 to mark a broadening of market performance, with opportunities emerging across regions, sectors, and asset classes, from Asia’s expanding technology and infrastructure markets to the defensive role of alternatives such as hedge funds, private credit and real assets.

HSBC AM believes the global economy is experiencing a “coming together” of growth rates across major developed economies. This reflects a shift from the “K-shaped” dynamics of past years, where US exceptionalism dominated global performance. HSBC AM thinks that technology investment will continue to contribute to US GDP, adding an estimated 0.5 per cent, yet Europe and China’s policy support, combined with broader global demand, should bring growth rates closer across regions.

At the same time, Asia, the Gulf, India, Indonesia, and frontier markets continue to lead the world in GDP growth, the outlook states. These markets remain structurally strong and potentially better positioned to perform in a year where financial conditions are supportive, policy uncertainty declines, and global trade disruptions appear less severe than anticipated.

A broadening out of market returns can also continue amid global profits, with investor interest in emerging markets (EM) supported by the potential for further US dollar weakness and exposure to Asia’s burgeoning tech sector. Robust and credible policy frameworks have meant improved macro resilience and less emerging market asset volatility, HSBC AM continued.

Meanwhile, the hedging properties of developed markets (DM) government bonds are likely to be undermined by high debt and sticky inflation, making bond substitutes critical. This calls for investors to “diversify the diversifers.”

Alternatives
Historically, treasuries and gilts dominated defensive portfolio construction. However, in an environment where rates remain higher for longer and government bonds offer less protection, alternative strategies, including hedge funds, infrastructure, and private credit, are increasingly being used to diversify risk, HSBC AM said.

Hedge funds, in particular, are regaining importance; historical patterns show that in regimes similar to today, marked by global shifts, inflation variability and policy complexity, such conditions are supportive for certain hedge fund strategies

The firm expects market performance to broaden in 2026. With mega-cap technology companies accounting for nearly 70 per cent of US corporate profits in 2025, concentration risk has increased sharply. It believes that the AI investment boom can spill over into other sectors – utilities, construction, healthcare and basic materials – and there should be an uplift in the performance of some of those other sectors.

“Several factors are driving this expected broadening. Global profit growth is starting to converge rather than relying solely on US technology. Valuations remain attractive in Europe, Australasia, and the Far East (EAFE) markets, emerging markets, and in US sectors outside mega-cap tech,” Xavier Baraton, global chief investment officer at HSBC AM, said. “Asia’s technology and services sectors offer strong potential with lower valuation risk. And sectors such as infrastructure, basic materials, industrials, utilities, healthcare and the living sector of real estate – including multifamily, student housing and senior living – stand to benefit from major global themes such as electrification, the energy transition, digitisation, and ageing populations.”

Opportunities in Asia’s technology markets may prove as compelling as those in the US, with less demanding valuations, the firm added.

Private Equity
Other areas, particularly private equity, have become overlooked in recent years. This creates the potential for “role reversal,” in which the “broadening out” theme encourages investors to reassess private equity and related areas, such as listed infrastructure, especially if rate cuts begin to materialise. Private equity experienced a challenging exit environment in 2024 and early 2025 but is showing early signs of improvement.

Hedge Funds
As traditional hedges such as bonds may lose their reliability, hedge funds should become increasingly important. In terms of specific strategies, HSBC AM is focusing on discretionary macro, event-driven, and multi-strategy managers.

Private Credit
Private credit has grown into a $3 trillion market, delivering strong historical returns and providing downside protection during major drawdowns. While returns may moderate with interest rate cuts in 2026, yields remain above many institutional thresholds. In the current environment, a conservative approach to private credit, with a focus on quality may be appropriate.

Asia remains one of the most compelling private credit markets globally. Demand for financing is rising sharply, supported by smart city construction, renewable energy expansion, rising domestic investment flows, and strong corporate financing needs.

Infrastructure
Asia is also attractive from an infrastructure perspective in HSBC AM’s view. Asia’s infrastructure market, valued at $1.61 trillion in 2025 and expected to grow to $2.22 trillion by 2030, offers access to mid-market renewable projects, transport upgrades, and digital infrastructure. Meanwhile, listed infrastructure assets provide inflation-linked cash flows and exposure to structural growth themes.

Emerging markets
A weaker US dollar in 2025 has supported emerging market performance. However, recent resilience is driven not only by currency effects, but also by deeper macroeconomic reforms. Notably, some emerging bond markets are now displaying lower volatility than their developed-market counterparts, an important and often underappreciated structural shift.

While China faces ongoing deflationary pressures, HSBC AM expects consumption-focused fiscal support to remain in place, consistent with the latest five-year plan. Trade dynamics remain at risk, but the regionalisation of supply chains and the rising importance of Asia-to-Asia trade flows provide meaningful offsets.