Post by Channel Capital

2025 was another strong year for investors, with asset prices rising despite geopolitical uncertainty. Over recent years, the heavy lifting has been done by accommodative fiscal and monetary policies, falling inflation, and the AI/data centre boom. But as we enter 2026, markets are priced for perfection, leaving less room for error. Head of Investment Oversight Matthew Griffith highlights the key themes taking shape: ▪️ High valuations – markets can still move higher, but the scope for disappointment is higher than in prior years. ▪️ Tech – Earnings and AI capex are critical factors. AI capex must eventually deliver on productivity gains and commercial returns to justify current high valuations. ▪️ Quality matters – focus on resilient businesses, managers, and sectors that allow some upside participation, but are resilient during times of volatility. ▪️ Private markets offer opportunities – private equity, credit, and real assets can diversify portfolios, but manager selection and sizing are key. ▪️ Discipline is essential – maintain liquidity, hedge thoughtfully, and balance upside participation with downside protection. Inflation, evidence of broadening earnings, and AI execution remain the wildcards. For investors, this environment calls for careful balance, selectivity, and patience. Read more: https://lnkd.in/gtuMHwjC