Kevin Hebner

Investors cannot afford to ignore artificial intelligence (AI), as the market capitalisation of the top global companies is set to leap to new highs – with upcoming IPOs from SpaceX, Anthropic and OpenAI expected to reshape stock market indices, according to Dr Kevin Hebner, managing director and global investment strategist at TD Epoch.

SpaceX is expected to be the largest IPO, raising about US$75 billion. With two more mega IPOs expected to launch in the next six months, all three will enter the indices quickly and change the Mag7 to the Mag10.

“SpaceX is set to be the biggest IPO ever. The company will be raising somewhere in the neighbourhood of US$75 billion, with 30 per cent of funds raised coming from retail markets. It’s going to be massively oversubscribed.

“It is an exciting deal and if it does come out at a valuation around US$1.75 trillion, it will be the sixth or seventh largest global tech company immediately, sitting just below Amazon (NASDAQ: AMZN),” he says.

SpaceX is more than just rockets. “There are three components to SpaceX. There’s the rocket ‘launch’ with Starship Version 3. There’s the communication business, with Starlink satellites, which is growing very rapidly. And then there’s the AI business. That is what most of the value in the IPO is being attributed to.

“Much of the valuation is effectively a call option on space and all the future possibilities that come with that (orbital data centres, a base on the moon or even mars). It is this element of hype or speculation, that adds to the excitement of this IPO,” he says.

Later this year, Anthropic, valued at around US$965 billion, is expected to IPO and following suit will be OpenAI which is expected to be valued at roughly US$850 billion.

“With the addition of these three companies, we will no longer have the Mag7, we will have the Mag10. The market capitalisation of the current Mag7 with the inclusion of these three companies will amount to around US$25-$28 trillion. This is likely to exceed the market capitalisation of all global equities in the world, excluding the US,” says Hebner.

The three companies will be quickly added to the indices, meaning institutional investors will be forced to buy it regardless of their concerns about valuations and volatility.

“Investors may not be interested in the ‘Mag10’ and AI and think it highlight speculative, but the reality is that the market cap for the upcoming Mag10 will be enormous.

“Given how critical it is to market valuations overall, investors will need to pay attention and know a lot about these companies and AI when investing in the market,” says Hebner.

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Claire Smith

Schroders says fears around artificial intelligence (AI) disrupting software businesses have been overblown, with private equity investors taking a far more selective and measured approach than public markets.

Claire Smith, head of investment directors, public and private markets at Schroders, said investors had adopted a “guilty until proven innocent” mentality toward software companies, despite many businesses remaining deeply embedded in their customers’ operations.

“We think the market has overreacted,” said Smith.

“There’s been a view that AI is killing software. AI is absolutely reshaping parts of the software market, but the idea that every software company is suddenly at risk simply isn’t how private investors are thinking about it.

“When you look underneath the surface, many of these businesses still have highly sticky customer bases, proprietary data and critical functionality.”

Smith said Schroders had conducted a detailed “AI threat assessment matrix” across its software investments to determine which businesses faced genuine disruption risk and which were likely to remain resilient.

“We assessed whether AI could reduce the number of software seats being sold, or potentially make a platform redundant altogether,” she said.

“In our semi-liquid private equity fund, only around 2 per cent of the portfolio fell into what we classified as high risk.”

Smith said software businesses servicing highly specialised industries, particularly those handling sensitive or operationally critical data, remained difficult to replace.

“You’re not going to vibe-code your way around payroll systems handling confidential patient data. Businesses still need reliability, compliance and security. AI is not eliminating that,” she said.

Private equity valuations had also been less volatile than listed markets because private investors were not caught up in the rapid repricing of large US technology stocks.

“At one point we were valuing our portfolio at a 40 per cent discount to listed markets,” Smith said.

“That discipline meant when listed markets sold off, we didn’t experience the same level of volatility.”

While AI disruption remains a risk for some companies, Smith said the technology was also creating significant investment opportunities.

“We have invested in AI-linked businesses including a data annotation company servicing major artificial intelligence groups including OpenAI, Meta and Nvidia. We prefer businesses that are benefiting from the growth in AI infrastructure, rather than trying to predict which individual AI applications will ultimately win,” said Smith.

Beyond technology, Smith said many of the strongest private equity opportunities continued to come from stable, cash-generative businesses operating in niche industries.

“Sometimes the best investments are the boring ones. We look for companies with recurring revenues, strong customer relationships and services that businesses simply cannot switch off during difficult economic periods,” she said.

Smith said a growing number of opportunities were also emerging from founder-led and family-owned businesses globally as ageing owners seek succession solutions.

“Private equity can provide the capital and expertise to help these businesses continue growing while preserving the legacy founders have built,” she added.

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Eric Marais

The market’s view that emerging markets are still defined by the vulnerabilities of the past is increasingly at odds with the breadth of long-term value opportunities available across the asset class today, according to global contrarian investment manager Orbis Investments.

Orbis says the valuation gap between developed and emerging market equities suggests investors may still be pricing the sector for a level of pessimism that may no longer reflect the realities of the opportunity set.

“Viewing emerging markets through a narrow set of outdated risk assumptions means investors are potentially missing the opportunities presented by a more selective, bottom-up view of the sector,” says Orbis’ Head of Clients – Australia, .

Orbis’ recent white paper ‘Emerging Markets: The Map is Not the Terrain’ shows EM equities trading at around 16 times earnings on a cyclically adjusted basis, versus about 38 times for U.S. equities. That equates to a discount of roughly 60% and close to the widest on record.

“The truth is the old map of emerging markets no longer reflects the evolution seen in some policy frameworks, market institutions and shareholder outcomes across important parts of the opportunity set. These are all changing in ways the market still underappreciates,” Mr Marais said.

Here are five key updates to old assumptions about investing in emerging markets:

1. Emerging markets reward a more nuanced view of risk

Orbis’ close study of emerging-market equities has observed the asset class to be no more volatile than their developed-market peers.

In fact, emerging market volatility has steadily declined relative to developed markets over the past decade, and in recent years EM equity volatility has moved much closer to that of developed market peers.

“In recent years, EM equity volatility has more closely resembled developed-market volatility than many investors might assume. Volatility is not, in itself, a reason to dismiss an asset class. The more important question is whether investors are being compensated for the risks they are taking. In emerging markets today, we think many risks are better understood – and more fully priced – than many investors assume,” Mr Marais said.

2. Emerging markets can play a bigger role in diversification

Orbis argues emerging markets are also a diversification opportunity. Since the inception of the MSCI Emerging Markets Index in 1988 to the end of 2025, EM equities have shown a correlation of 0.72 with developed markets and 0.66 with U.S. equities meaning they have historically moved differently enough from developed and U.S. markets to offer investors a meaningful source of diversification.

“Investors are more aware of concentration risk in U.S. equities, but in every bout of volatility capital still tends to rush back to the same crowded exposures,” Marais said. “That is one reason emerging markets remain underused as a source of differentiated equity exposure.”

3. Selectivity matters more than passive exposure

Orbis says passive exposure can be especially blunt in emerging markets: investors get some excellent businesses, but also many deserving laggards.

“Benchmark inclusion can bring flows, but it does not remove the need for judgement,” Marais said. “In emerging markets, the biggest opportunities are often found where reform, governance improvement and capital discipline are converging – and those are not always captured well by passive exposure.”

4. Emerging-market currencies are more resilient than assumed

After a decade of U.S. dollar strength, many investors still approach EM currency exposure with caution. Orbis argues this is becoming a less reliable shorthand: many EM currencies now sit below long-term measures of fair value, while external balances and monetary frameworks in some EMs have improved.

“The old assumption was that currency weakness in emerging markets automatically meant deeper fragility,” Marais said. “That is no longer a safe shortcut. In many cases, currencies now behave more as shock absorbers than crisis triggers.”

5. Shareholder outcomes are an important measure of economic growth

A key market assumption for many investors is that strong profit growth necessitates solid earnings-per-share growth. But this translation is not always straightforward in emerging markets, as evidenced by the Chinese sharemarket. Over the 20 years to the end of 2025, listed Chinese companies grew net profits by about 15% per annum, but earnings per share grew by only about 5% per annum.

“For equity investors, growth only matters if shareholders actually receive it,” Marais said. “That is why governance, minority-shareholder protections and capital allocation are not side issues in emerging markets but are completely central to the investment case.”

EM trade: more nuanced than investors assume

Orbis says emerging markets are often still viewed as a single risk trade, rather than as a broad and increasingly differentiated opportunity set. Across parts of the emerging markets universe, policy frameworks are stronger, market institutions are more developed, and the gap between high-quality and low-quality opportunities has widened.

Orbis’ philosophy of investing in emerging markets is to focus on buying quality businesses at a meaningful discount to true long-term value, and patiently holding those positions for the long term, or until the market recognises that value.

“The investment terrain in emerging markets is a fundamentally different story now than it has been in the past,” Marais said. “Investors with a differentiated investment approach will be better placed to make the best of the mispricing opportunities that emerge. We believe those opportunities are among some of the most attractive long-term opportunities.

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Deborah Cunningham

New Chair Kevin Warsh’s ability to guide the Federal Reserve will depend upon the market’s belief he is not beholden to President Trump. Taking the oath in a White House ceremony did him no favors. It was the first time since President Reagan swore in Alan Greenspan that the ceremony took place there instead of at the central bank’s headquarters on the National Mall. Yes, Trump praised Warsh and said he should be “totally independent.” But context is everything.

Speaking of the dot plot

Holding steady

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Coordinating hedging and execution early may help reduce slippage, preserve liquidity, and maintain portfolio stability during volatile post-listing periods.

Key takeaways

• Mega IPOs could quickly turn private market gains into concentrated public equity exposure.
• Passive index inclusion may increase exposure institutional investors already hold privately.
• Overlay strategies can help institutional allocators protect gains while preserving flexibility.
• Coordinated execution planning may improve portfolio rebalancing during IPO transitions.

When private market wins become public market challenges

The next IPO wave may create a different kind of portfolio challenge for institutions already holding private stakes in companies like SpaceX and OpenAI. Years of gains built inside venture funds, growth mandates, and GP structures could quickly become some of the largest public equity positions in institutional portfolios once those companies begin trading publicly.

The nature of private market holdings often masked concentration risk, with valuations updating infrequently, positions embedded inside broader vehicles, and liquidity remaining limited. A public listing changes that dynamic quickly. A successful private markets investment can quickly become a much harder public markets position to manage.

Now, with the IPO pipeline beginning to reopen around some of the largest private market companies, institutions may face a more complicated transition than many expected. The challenge is no longer simply participating in the upside. It is managing what happens after those private gains enter public markets.

Mega deals driving the next wave of large-scale IPO activity

Current attention is increasingly focused on the big mega deals, defined as venture capital financings of $100 million or more. Those transactions represented roughly 70% of U.S. VC deal value in 2025, up from 56% the year before.

Historical examples such as Uber and Pinterest show how post-IPO volatility can persist long after the opening bell. Uber’s one-month implied volatility started around 60 before rising sharply around early earnings announcements and the November 2019 lock-up expiration. Pinterest experienced similar volatility spikes around early earnings periods as investors continued adjusting positions after the IPO.

Positioning portfolios ahead of the IPO wave

What to do after the IPO usually comes down to two paths: reduce exposure or maintain it while avoiding unintended concentration.

Volatility, selling pressure, and delayed liquidity can leave portfolios exposed to meaningful short-term swings just as concentration and implementation risks become more visible. For investors holding private stakes through venture funds or GP structures, lock-up restrictions and distribution timing can further delay when shares are actually available to sell, complicating rebalancing decisions after public trading begins.

That distinction is increasingly shaping how allocators approach hedging, customisation, rebalancing, and execution planning ahead of a listing.

Several themes are beginning to shape how institutions manage these transitions:

1. Use overlays to create flexibility

Investors may still believe strongly in the company’s long-term outlook. The challenge is managing how that exposure fits within the broader portfolio after the IPO, particularly when delayed liquidity and selling constraints limit how quickly positions can be rebalanced.

In those situations, options-based overlays can help protect accumulated gains while creating more flexibility around timing and rebalancing decisions. Structured approaches such as costless collars, which exchange some future upside participation for downside protection without an upfront premium payment, may help reduce exposure risk while avoiding rushed selling during volatile post-listing periods.

Alternatively, some institutions are not seeking to hedge an overweight position, but rather to gain exposure to an IPO ahead of its inclusion in benchmark indices and related passive investment vehicles. Call options can provide a capital-efficient way to manage the risk of being underweight during this transition period.

2. Know where concentration is hiding and prepare for passive exposures

Positions that once sat inside diversified private market structures can quickly emerge as outsised public equity exposures. Investors are increasingly evaluating how IPO-related holdings could affect portfolio exposures, benchmark alignment, and overall risk once public trading begins.

What began as a high-conviction private markets investment can quickly become a large passive public market exposure once those companies enter major indexes. Institutions already holding private stakes in potential mega IPOs may not want indexed mandates adding even more exposure, but they may not necessarily want to exit the position either.

Completion portfolios, along with customisation and exclusions, can help manage concentration more efficiently across the broader portfolio while still maintaining exposure. That flexibility may be particularly relevant across the endowment and foundation space, where implementation decisions often align closely with broader mission-driven priorities. For example, an institutional investor may have reduced its passive equity exposure and replaced it with an equity completion mandate designed to more efficiently manage aggregate factor exposures across the broader equity portfolio. In that context, the investor could choose to exclude adding SpaceX exposure if it was already economically overweight the company through shares received in a private equity transaction that had not yet become liquid.

3. Coordinate execution before rebalancing begins

Managing downside exposure is only part of the challenge. Large, concentrated positions still need to be unwound efficiently once investors decide to rebalance. IPO transitions can create liquidity pressures and temporary selling imbalances as multiple early investors attempt to reduce exposure simultaneously.

Poor execution can erode gains quickly once large positions begin unwinding. Coordinating hedging and execution early may help reduce slippage, preserve liquidity, and maintain portfolio stability during volatile post-listing periods. Agency trading models, where trades are executed on behalf of clients without taking principal positions, may also help align execution more closely with investor objectives during complex portfolio transitions.

Investor Implications

Institutions already holding private stakes in potential mega IPOs may need to treat the transition to public markets as an active portfolio event rather than a simple liquidity milestone. The challenge is not only whether to reduce exposure, but also how to manage timing, benchmark impact, and implementation constraints once public trading begins.

That may require decisions well before the IPO itself. Institutions that evaluate concentration, liquidity needs, hedging approaches, and benchmark exposure earlier may have greater flexibility once shares begin trading publicly and passive flows accelerate.

By Christina Shockley, Director, Customised Portfolio Solutions and Dylan Kelly, Senior Portfolio Manager, Overlay Solutions 

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Notes:
[1] SpaceX alone has reportedly discussed valuations approaching $2 trillion, potentially making it the largest IPO in history. 
[2] Nasdaq 

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In emerging markets, concentration is driven by key countries, most notably Taiwan, China and South Korea, as well as AI-related industries.

Global equity markets are becoming increasingly concentrated, with benchmark performance being driven by a smaller group of stocks, sectors and countries. This dynamic is creating new challenges for investors, particularly active managers seeking to balance risk and return.

Recent market trends show that both developed and emerging market indices are heavily influenced by a narrow set of large-cap companies, particularly within the technology sector. In developed markets, US mega-cap stocks continue to dominate index performance, while in emerging markets, concentration is driven by key countries, most notably Taiwan, China and South Korea, as well as AI-related industries.

This concentration has led to narrow earnings leadership, with a limited group of companies accounting for a disproportionate share of market returns. As a result, broader market participation has weakened, with many stocks lagging headline index performance.

For active managers, the environment presents a valuation and positioning dilemma. Many of the largest contributors to index returns are trading at elevated valuations, leading valuation-sensitive managers to underweight these stocks. This can result in performance divergence from benchmarks during periods when market leaders continue to outperform.

At the same time, rising concentration is increasing benchmark-relative risk, including higher tracking error and potential shifts in portfolio beta. These dynamics can affect how portfolios respond to market movements, particularly in rallies driven by a small number of dominant stocks.

While it remains uncertain whether current concentration levels are structural or transient, historical patterns suggest that periods of narrow leadership are unlikely to persist indefinitely. In the interim, the divergence between benchmark performance and broader market outcomes is expected to remain a key feature of global equities.

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Jeremy Hall

Brookfield has launched its Brookfield Infrastructure Income Fund (AUD) (the “Fund”) for wholesale investors in Australia’s private wealth market, with demand expected to be strong from the advised and self-managed super fund channels.

Brookfield Private Wealth has been expanding its offering to wealth investors across Australia and Asia Pacific more broadly, most recently signing a partnership with Japanese financial institution Mizuho Securities to distribute its infrastructure income strategy in Japan in April 2026.

With a total asset value of US $8.3 billion,^[1] the Brookfield Infrastructure Income strategy (“BII”) provides wealth investors with access to Brookfield’s leading global infrastructure platform through a diversified portfolio of private infrastructure investments. Key features of BII include monthly distributions and lower minimums. With US$390 billion in assets under management within its infrastructure and energy businesses, Brookfield’s global scale and 125+ year history as an infrastructure owner operator underpins the strategy’s ability to source, operate and grow high-quality assets that support the backbone of the global economy.

Jeremy Hall, Head of International for Brookfield’s private wealth business, said: “For decades, institutional investors have benefited from Brookfield’s investment capabilities and access to high-quality infrastructure assets, which deliver strong cash flows, built-in inflation protection, and low correlation to equities and bonds. These characteristics are increasingly sought after by individual investors to insulate and improve risk-adjusted returns for their portfolios. By bringing BII to Australia, we’re providing the same access to Brookfield’s long standing institutional infrastructure expertise and track record to individual investors in Australia looking to diversify their portfolios.”

The Fund is currently available to the Australian wealth market via platforms including Macquarie Wrap, HUB24, Praemium, Powerwrap and Mason Stevens.

Channel Investment Management Limited (AFSL 439007) acts as the Responsible Entity and Investment Manager for the Fund.

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Notes: 
[1] as of March 31, 2026

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Integrating trend following into an investment strategy serves as a structural mechanism for portfolio resilience rather than a short-term market play.

Trend following strategies aim to generate returns by capturing sustained price movements across a diverse range of asset classes. Unlike traditional investment approaches that rely on valuation or forecasting, trend following is fundamentally reactive. It is built on the premise that asset prices exhibit momentum; that is, rising prices tend to keep rising, and falling prices tend to keep falling, for periods longer than pure randomness would suggest.

Trend following does not seek to forecast markets or prices. Instead, it identifies the direction of an established trend and positions the portfolio accordingly:

• In prolonged bull markets a trend following strategy takes long positions to profit from continued upward momentum
• In extended bear markets a trend following strategy takes short positions to capitalise on continuing downward price movements, providing a source of portfolio diversification and crisis alpha

While market selection, position sizing and risk controls dictate the intricacies of execution, the core objective remains constant: identify the direction of a market trend and assess its potential duration.

Traditional trend following markets

At face value, trend following is a simple strategy. Buy something that is going up; and sell something that is going down. However, Finance 101 says that trends should not exist; markets are efficient and information is instantaneously reflected in prices. This ignores the fact that decisions lag news flow, that economic cycles play out over years and that humans get emotional and sometimes make irrational choices.

Trend following strategies eliminates the factors that can impede good decision making. Instead, it identifies and captures trends across a range of sectors: stocks, bonds, currencies, agricultural investments, commodities, interest rates, energy and utilities and credit. Strategies typically invest across hundreds of markets and sectors at any one time.

Traditional trend-following markets are the large, exchange‑traded futures and forwards: equity indices (for example, S&P 500), government bonds (US Treasuries), major foreign exchange (USD/GBP) and core commodities (such as gold, copper or crude oil). They are highly liquid, transparent and operationally simple, with deep capacity, tight bid/ask spreads and long data histories, making them efficient to access at scale. Trend following across these markets offers the combined attractiveness of a positive expected long-run Sharpe ratio and positive expected crisis Sharpe ratio^[1]. As a reminder, the Sharpe ratio is a metric for risk-adjusted return, which shows excess return per unit of risk.

Traditional markets can also proxy the key macro risk factors present in the global economy. For example, growth, inflation, monetary policy and world trade movements can all be captured using a combination of these liquid markets.

Figure one shows market combinations that may be sensitive to moves in each of these macro factors. These are illustrative examples – and trend following will capture many more effects – but in big macro events such as an equity collapse, these core markets typically feel the largest impact.

Since trend-following models can be both long and short, traditional markets tend to exhibit the strongest defensiveness (higher expected crisis Sharpe ratio) during broad, cross‑asset sell‑offs, providing potential ‘crisis alpha’ to multi‑asset portfolios. In stressed environments, movements in the largest macro risk factors are amplified, generating more opportunities for trend to position appropriately (long or short) and to benefit. However, the influence of these macro factors is not constant. They can go through periods of being more or less significant in the context of the global economy.

Given the unpredictable nature of price trends, trend following strategies often broaden their scope to encompass both traditional and alternative markets. Alternative markets offer exposure to idiosyncratic, market-specific risk factors that drive diversifying price trends.

Alternative markets come in many forms and historically, Man Group’s research demonstrates the application of trend following models to this diversified set of markets has delivered higher absolute returns. Importantly, classifying a market as alternative doesn’t equate to it being inherently less liquid.

Synthetic markets – which allow trend followers to trade themes in markets versus the markets themselves – can also provide further diversification from traditional markets. A well-documented example is equity styles; constructed by cross-sectionally ranking cash equities based on fundamental metrics representative of a particular investment style. Trend following applied to equity styles not only offers a more robust way to monetise equity styles but is also highly diversifying to traditional index-based trend following.

Why invest in trend following strategies?

There are five key reasons to consider a trend following strategy for clients:

1. Diversification

Diversification is the primary tool for increasing portfolios’ Sharpe ratio. Because trend following strategies trade across a broad spectrum of uncorrelated global assets, they provide a reliable mechanism for dampening volatility and enhancing portfolio diversification.

Many of traditional assets have similar underlying return drivers: stocks, fixed income, real estate and private equity all rely on a growing economy for price appreciation. When this driver breaks down due to geopolitical uncertainty and market events, these assets can sell off together. Diversification often fails when investors need it most.

This is where trend following comes in. Unlike traditional assets, trend following does not rely on economic growth to generate returns and has historically been uncorrelated to equities, bonds, real estate and other asset classes. More importantly, it has tended to perform best precisely when other asset classes struggle, offering a valuable counterbalance when stocks are meaningfully down^[2].

Figure two summarises this defensive property, with trend historically delivering in the worst periods for equities, while the performance of bonds and multi-strategy hedge funds are mixed.

2. Low correlation to traditional assets

In recent years, the traditional negative correlation between equities and bonds has broken down. Historically, bonds acted as a reliable cushion during stock market downturns. However, recent periods of high inflation and aggressive central bank interest rate hikes have caused both asset classes to move in the same direction, pushing their correlation into positive territory.

This shift has impacted the traditional 60/40 portfolio, most notably in 2022 when both equities and fixed income suffered simultaneous, double-digit losses. Because bonds can no longer be guaranteed to offset equity risk, financial advisers increasingly look beyond the 60/40 model, incorporating alternative strategies to achieve true portfolio diversification. Trend following strategies are a good example because they are structurally agnostic to asset class correlations and can take short positions.

Furthermore, because these strategies trade across dozens of uncorrelated global sectors, they provide exposure to return drivers that are completely absent from a standard equity and bond portfolio.

3. Risk/return and ‘crisis alpha’

Integrating trend following into a portfolio of traditional assets generally improves performance consistency while reducing volatility and drawdowns. Because these strategies can profit from downward price trends, they offer critical capital preservation when traditional markets decline.

‘Crisis alpha’ is a term that describes the structural ability of trend-following strategies to generate positive absolute returns during periods of sustained equity market distress and economic shocks. The term was formalised by authors Greyserman & Kaminski who used centuries of historical market data to demonstrate that because trend following systems are automated, rules-based and capable of taking short positions, they reliably provide a unique form of ‘insurance’ or alpha exactly when traditional 60/40 portfolios suffer major drawdowns^[3].

4. Liquidity

Trend following strategies invest across hundreds of liquid markets and usually offer investors daily liquidity; trend following is much less likely to get ‘locked up’ in the event of a market crisis.

5. Manage investor behaviour

By removing human emotion and biases through an entirely systematic, rules-based process, trend following offers a powerful behavioural benefit. This disciplined framework prevents clients from panic-selling or chasing overvalued assets during market extremes.

Equity and trend make good friends

Most advisers have experienced first-hand the frustration of seeing parts of a portfolio designed to provide ballast not always hold up as markets turn volatile. A historic case in point was the 2022 sell-off, when stocks and bonds declined in tandem. Even during the more recent shock of the war in the Middle East, stocks initially slumped and yields shot up.

As outlined earlier in this article, trend following has historically displayed a diversifying edge in times of market stress (for both equity and bond crises), solidifying its role as an alpha component which is not only diversifying but also may provide portfolio insurance properties.

It works for three reasons. First, as noted earlier, human behaviour tends to be predictable. Investors consistently underreact to new information and overreact to fear, creating trends that persist longer than efficient-market theory (the idea that asset prices already reflect all available information, so you can’t ‘beat’ the market) would suggest. Second, economic cycles can potentially play out over years, driving sustained directional moves in interest rates, currencies, commodities and other drivers. Third, decisions lag news flow. Information doesn’t get priced instantaneously; it gets digested, debated and acted upon gradually.

The data shows trend following to be a complement to equities (figure four). Going back to 2000, comparing US equities (S&P 500) and trend following over 12-month periods, Man Group found trend following is additive most of the time (almost 95%) to US equities.

In 46% of 12-month periods, both trend and equities are positive while in 50% of 12-month periods, one component helps offset negative returns from the other. Only 4% of 12-month periods result in both components delivering a negative return. Finally, in about a quarter of the observations, when US equities are negative, trend following generated a positive return 82% of the time.

Trend following exhibits convexity: its returns grow more positive the more asset prices move significantly in either direction. During the dot-com crash, the Global Financial Crisis and the 2022 inflationary episode, trend following delivered competitive positive returns while traditional assets suffered. This ‘crisis alpha’ property is a key attribute which can differentiate trend following from other alternatives that tend to underperform in the left tail of equity markets. When markets move a lot, either up or down, trend following strategies tend to do well.

When considering a trend following strategy for your clients, there are some important questions to ask:

• Is the strategy true to label and has it remained so over time?
• Has the strategy delivered crisis alpha in times of market downturns?
• Is the strategy performing as expected during inflationary periods?
• Is the strategy liquid and transparent?
• Does the strategy harness the latest technology – machine learning, artificial intelligence, platforms for swift execution of trades?

Integrating trend following into an investment strategy serves as a structural mechanism for portfolio resilience rather than a short-term market play. By functioning as a form of portfolio insurance that generates positive expected returns over time, the strategy provides downside protection as a byproduct of growth, rather than as a net cost like traditional put options. Maintaining a long-term strategic commitment allows the strategy to effectively stabilise a portfolio during major market dislocations.

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———-

Notes:
[1] A Trend Following Deep Dive: The Optimal Market Mix for a Trend Follower, Man Group, January 2026
[2] Ibid.
[3] Trend Following with Managed Futures: The Search for Crisis Alpha, Greyserman & Kaminski, 2014

Important information: The information included in this article is provided for informational purposes only and is general advice only. It does not take into account an investor’s own objectives. The information contained in this article reflects, as of the date of publication, the current opinion of Man Group plc and is subject to change without notice. Sources for the material contained in this article are deemed reliable but cannot be guaranteed. We do not represent that this information is accurate and complete, and it should not be relied upon as such. Any opinions expressed in this material reflect our judgment at this date, are subject to change and should not be relied upon as the basis of your investment decisions. All reasonable care has been taken in producing the information set out in this article however subsequent changes in circumstances may occur at any time and may impact on the accuracy of the information. Neither Man Group plc, GSFM Pty Ltd, their related bodies nor associates gives any warranty nor makes any representation nor accepts responsibility for the accuracy or completeness of the information contained in this article. Past performance does not guarantee future results.

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Kamblevicius believes investors risk overlooking the breadth of opportunities emerging across global markets as AI-related investment expands well beyond the dominant mega-cap technology names.

Speaking about the outlook for global equities, Kamblevicius said markets continue to be underpinned by resilient earnings growth across regions and sectors.

“While valuation multiples are elevated in some parts of the market, the earnings story we’re seeing globally remains incredibly encouraging,” said Kamblevicius.

“As long as companies continue to deliver earnings growth, equity markets can still generate strong returns without valuations needing to expand further.”

Kamblevicius said investor attention remained heavily concentrated on a small group of AI-linked technology companies, despite AI now spreading much more broadly across the global economy.

“AI beneficiaries stretch across a much broader supply chain than many investors realise,” he said.

“It’s not just chip designers like Nvidia. There are opportunities across semiconductor manufacturing, electrification, utilities, cooling systems, data centre infrastructure and industrial manufacturers globally.

“The capital expenditure that is coming into the market starts to benefit companies further down the supply chain; the companies that do cooling systems for the data centres, the companies that do wiring for the data centres. Micron (NASDAQ: MU), for example, is (as of Friday 22 May) the fourteenth largest company in the world from being very unknown 12 months ago.

“In Japan and Europe, parts of the industrial sector continue to offer attractively priced businesses with strong profitability and compelling long-term growth stories,” he said.

Kamblevicius also warned investors against focusing too narrowly on perceived risks within large-cap technology stocks while overlooking valuation pressures elsewhere in the market.

“Sometimes investors become too focused on the areas most discussed in the media while missing risks developing elsewhere. There are pockets of the market outside technology that are trading at much more difficult-to-justify valuations.”

He said heightened stock-level volatility and geopolitical uncertainty are making portfolio diversification and disciplined risk management increasingly important for investors.

“Single stock volatility is significantly higher than overall market volatility, which means position sizing and diversification are becoming increasingly important in protecting investor capital,” he said.

Kamblevicius said despite ongoing geopolitical tensions and market volatility, the combination of resilient earnings growth and expanding investment opportunities across sectors continued to support the long-term outlook for global equities.

“Until the earnings story becomes challenged, we continue to see solid opportunities for investors in global equity markets,” he said.

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Brent Burnett

In a market increasingly dominated by a small group of AI-linked companies, investors are actively looking for diversification, and infrastructure is one of the few sectors areas delivering it. Infrastructure offers exposure to hard assets, broad economic activity, and essential services that people rely on every day, from energy to transport and water.

With more than a decade of data showing that infrastructure can deliver solid total returns, reliable income, and meaningful downside protection across cycles, the asset class also offers a degree of inflation resilience, through contract-linked pricing and rising replacement costs. Importantly, long-term investors view volatility differently. Short-term market movements or geopolitical shocks don’t change the underlying need for critical assets. That’s where private infrastructure continues to prove its value.

Global tailwinds support next phase of infrastructure investment

2026 is shaping up as a key year for infrastructure expansion globally. Europe is doubling down on energy security, while the rapid growth of AI and data centres is driving demand for power and digital infrastructure.

There are also underappreciated opportunities, including last-mile fibre and specialist logistics infrastructure—particularly in supply-constrained areas—continues to offer attractive fundamentals.

In addition, power scarcity is supporting higher prices in energy markets, even as renewables face policy headwinds in some regions. And in private markets, the infrastructure secondary market is emerging as a compelling opportunity particularly for investors with the scale and relationships to access high-quality assets.

APAC and Europe dynamics shaping infrastructure outlook, with Australia among relative beneficiaries

APAC is far from a uniform story. Asia remains a dominant buyer of global energy, accounting for around 75% of Gulf oil and 60% of LNG, which has left the region highly exposed to recent market volatility. Prices have surged, with benchmark LNG rates jumping roughly 50% in the early phase of the conflict, and some spot cargoes trading at multiples of pre-war levels. The impact, however, is uneven. South Asia and parts of frontier ASEAN are feeling the pressure from higher energy costs, while resource-rich markets such as Australia, Indonesia and Malaysia are benefiting, seeing stronger cash flows as demand drives higher utilisation across energy export infrastructure. Meanwhile, in Europe, 2026 is shaping up as a pivotal year for infrastructure investment. Governments are accelerating efforts to strengthen energy security, while surging demand linked to AI and data centres is driving new investment across power and digital infrastructure. The key takeaway is that infrastructure is not a single trade. It’s highly regional, and investors need to be selective in how they position capital.

By Brent Burnett, Global Head of Infrastructure and Real Assets

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