Columbia Threadneedle Investments: Asset Allocation update – February 2026

2026 has thus far seen geopolitical events, from Venezuela and Iran to Greenland, attracting attention. Headlines about tariffs and questions over the independence of the US Federal Reserve have continued. Still, financial markets remain resilient.

Solid economic data and strong earnings have provided support and the outlook for growth is improving, aided by fiscal stimulus. Monetary policy also appears favourable. Reflecting this backdrop, we have moved to further increase our overweight position in equities. Despite the prominence of geopolitical developments, these events have not altered the fundamentally supportive environment underpinning our positive outlook.

We remain constructive on the outlook for the global economy. After showing resilience in 2025, we expect 2026 to focus on extending the growth cycle. Global growth should be solid and from a regional perspective Germany is set for a notable rebound, driven by fiscal stimulus. China aims to meet its 5% growth target and US growth will likely match that of 2025, with scope for improvement if further stimulus is introduced. The UK is expected to grow modestly, though still below trend. Overall, the environment supports steady economic expansion and positive corporate earnings.

Looking ahead, we are optimistic for 2026. That said, we are mindful that much optimism is already priced in. This makes markets potentially more sensitive to policy changes, geopolitical events and disappointing earnings results, especially in sectors linked to transformative themes such as artificial intelligence (AI).