After emerging market equities outperformed developed ones in 2025 and as investment managers seekk to diversify portfolios in 2026, a number of wealth managers are continuing to step up exposure to emerging market equities and emerging market debt in 2026.

This week, UK wealth manager St James’s Place (SJP) made a number of portfolio adjustments as it enters 2026, aimed at strengthening diversification, improving risk-adjusted returns and maintaining resilience in a late-cycle market environment.

The adjustments include introducing an allocation to emerging market debt (EMD) across portfolios. While the firm’s stance on EMD remains neutral, it sees it as a structurally underrepresented segment of global government bond markets which provides diversification benefits to a portfolio.

SJP has also reduced exposure to higher-risk credit assets in developed markets, where spreads have become increasingly tight.

Although US equities remain the cornerstone of many investors portfolios, the move comes at a time when geopolitical worries, including concerns about a weakening dollar and trade frictions, have weighed on minds.

FE fundinfo, a financial data company connecting the investment industry across the UK, Europe and Asia Pacific through its Nexus platform, announced the results of its January Crown Ratings rebalance yesterday. The rebalance showed a rise in emerging market debt funds. The ratings show that investors are looking for ways to diversify as inflation concerns, and a weakening dollar and geopolitical risks intensify. The firm said that emerging market debt is enjoying a comeback, with the weaker dollar opening up opportunities for funds such as Muzinich Emerging Markets Short Duration and Barclays Global Access Emerging Markets Debt, both of which offer investors a way of diversifying away from US-centric risk.

Emerging market equities
Emerging market equities also remain an active overweight for SJP. “They continue to offer some of the strongest five-year expected returns globally, supported by favourable valuations and diversification benefits relative to US-dominated developed market indices,” Hamish Gibberd, multi-asset portfolio manager at St James’s Place, said

Yesterday, Forvis Mazars also announced changes to its asset allocation, including an increase in its exposure to emerging market equities, driven by renewed economic growth and helped by a weaker dollar. “Emerging markets have been laggards for a number of years amid domestic economic challenges and with the headwind of US dollar strength. These regions are now achieving strong and sustainable economic growth whilst US dollar weakness, a trend we expect to continue, is providing a further boost and leading to earnings upgrades,” Ben Seager-Scott, chief investment officer at Forvis Mazars, said. “Global stimulus measures are also likely to benefit this asset class. We therefore increase our exposure to emerging market equities, using our existing index tracking fund.”

The firm has also tilted away from expensive mega-cap US technology names and increased its exposure to other US equities. "Last year’s strong equity performance has pushed valuations in certain areas to stretched levels – most notably among the largest US technology companies. We believe these names now look especially richly priced, with significant future growth already assumed, whereas other parts of the market appear more attractively valued with greater potential for upside," Seager-Scott said.

Other views
They are not alone in their views. Swiss-based Pictet Wealth Management and Lombard Odier also believe that emerging markets look well positioned in 2026 in a world of more intense competition for resources and technology, supported by accommodative fiscal and monetary policies. Daniel Casali, chief investment strategist at UK wealth manager Evelyn Partners, highlighted recently that emerging markets outperformed developed markets in 2025 and could do so again in 2026, supported by a weaker US dollar. See more here and here.