Global Outlook | January 2026

Entering the Later Late Cycle

Welcome to our inaugural global outlook, which reflects the questions we are asking as long-term stewards of capital. With a global multi-asset remit and a deep focus on private markets, our investment horizon is quite long-term and less focused on short-term market dynamics compared with the structural forces shaping the next cycle. This outlook is written with that mindset and incorporates near-term data, while our investment frameworks target a multi-year horizon.

Download Full Report

Overview

A Moderation to Late Cycle Returns Ahead

Our econometric models point to slightly below average returns ahead in aggregate. This is consistent with previous late cycle periods, with a key message that dispersion across private market investments is likely to rise.

All cycles must come to an end, but we think 2026 will bring a “later late” cycle as let-tail risks remain well constrained. Overall, economic growth will persist at a near-trend pace, but asset valuations constrict the aggregate return picture. Corporate balance sheets are healthy, insulating against broad credit risks, but we are particularly sceptical that profit margins can continue to expand as they have in the post-Covid era.

Deal Flow Will Continue to Improve

This year has been a strong one for exits, after three years of consistent declines. Both M&A and IPOs showed renewed signs of life, and buyout deal flow has stabilised.

Private equity has faced a liquidity hurdle in recent years, as exit opportunities dried up. Recovering M&A and IPO activity has sparked optimism for the fundraising and deal pipeline ahead, which is a welcome change. Our models suggest a healthy continuation of this theme in 2026 driven by market momentum, sentiment and, hopefully, less volatility on the geopolitical front.

Lofty Expectations Remain a Key Risk

Sentiment and valuations tend to cycle together, and the sell-side remains quite optimistic on forward returns.

Price targets (and underwrites) are perennially very positive, and the current consensus outlook is even more bullish than usual. At the headline level, consensus targets point to 15% upside for global equities (vs. a 12% historical average). In particular, analysts are bullish in technology and AI-related sectors, which have become the largest share of public markets and private market deal activity.

Capital Market Sensitivity to Geopolitics will Attenuate

Policy uncertainty and market volatility tend to flow together, but have recently diverged.

Over the past 20 years, there have been a few instances of extreme policy and market volatility, such as the GFC and the Covid crisis. But, during 2025’s bout of significant policy uncertainty, the markets remained relatively calm and recovered their initial losses swiftly. Investors have become accustomed to increased geopolitical noise and instead appear more focused on corporate fundamentals.

Investment Strategies

Creating long-term value through differentiated strategies.

Join Our Team

Be part of an agile team with unmatched access to global opportunities.