A stock market bubble poses the biggest risk to investors in 2026, according to an annual fund manager poll by the Association of Investment Companies.
A third (33%) of fund managers cited the risk of a stock market bubble, with US trade tariffs and a weakening of the global economy also causing concern.
Nearly half (48%) of managers believe global stock markets will rise in 2026, with just half that number (24%) saying they would fall.
Nick Britton, research director of the Association of Investment Companies, said: “The high concentration of the US and global stock markets in a small number of names is certainly giving investment trust managers pause for thought.
“A third of our managers are worried about a potential stock market bubble, even though about half of them still see global markets continuing to rise next year. Since no-one knows what the future holds, it’s important to stay focused on your financial goals and maintain a diversified portfolio as we head into 2026.”
Martin Connaghan, senior investment director of Murray International Trust, said global equity markets continue to navigate a challenging backdrop, marked by elevated valuations, a slowing global economy, ever increasing levels of government debt and persistent geopolitical uncertainty.
“These headwinds contrast with a solid – though arguably narrow – earnings profile and a potentially supportive monetary policy environment. One shouldn’t point to elevated multiples or market concentration and say that markets should correct, but at the same time, we must be mindful that when markets are concentrated and expectations are high, the margin for error is small, and gravity can be a considerable force,” he said.
Felise Agranoff, portfolio manager of JPMorgan American Investment Trust, said: “US equity valuations remain high, which leaves markets more sensitive to disappointment. If earnings don’t keep pace or geopolitical tensions rise, we could see some further volatility. Investors have enjoyed strong returns for years, so it’s natural to expect a few bumps along the way.
“That’s why we stay focused on fundamentals: owning businesses with solid cashflows, good management and durable demand. It’s these qualities that allow companies to ride out uncertainty and keep delivering for shareholders over time.”
For Omar Negyal, portfolio manager of JPMorgan Global Emerging Markets Income Trust, the biggest challenge on the horizon remains US trade policy.
He explained: “Tariffs continue to unsettle global supply chains and could dent export-led growth in some markets. Meanwhile, investor sentiment in China and tech could prove fickle; after a rapid rebound, expectations may have run ahead of reality.
“Beyond that, geopolitics, elections and the path of the US dollar will all shape the year ahead. But while risks remain, we see many emerging economies in far better fiscal health than before. For us, volatility isn’t a reason to retreat – it’s a chance to find the next wave of long-term winners.”
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