We are pleased to share our
2026 Asset Allocation Perspectives and Market Outlook: Uncharted Territory.
We believe the backdrop remains generally supportive for risk assets in 2026, but shifting tariff policy, large fiscal deficits, elevated valuations and unprecedented market concentration create a more complicated landscape. This report shares our philosophy on asset allocation as well as the themes and market dynamics influencing how we are constructing resilient portfolios today.
KEY THEMES:
A CONSTRUCTIVE MARKET ENVIRONMENT
The market environment appears to remain supportive of risk assets in 2026, underpinned by solid economic growth, lower interest rates, rising real wages and healthy consumer and corporate balance sheets.
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THE NEXT PHASE OF AI
AI investment is growing more complex and capital intensive, but improving models and expanding use cases suggest 2026 may mark a shift from experimentation to implementation, broadening the benefits and potential returns from AI beyond companies focused on the infrastructure buildout. We remain enthusiastic but cautious about the prospects of AI, closely monitoring returns on capital, valuation excesses and AI’s implications for labor markets, energy and long-term growth.
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A CASE FOR QUALITY
Despite recent challenges for quality stocks, we remain committed to this style of investing and are finding attractive opportunities outside perceived AI winners as valuations in quality stocks have fallen relative to the broader market.
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OPPORTUNITIES OUTSIDE THE U.S.
International markets remain a key element of diversification in our equity portfolios, given their more attractive valuations and distinct return drivers. Japan remains one of our highest-conviction positions outside the U.S., and we continue to identify high-quality global companies listed in Europe and Asia to complement our U.S. holdings.
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BUILDING RESILIENT PORTFOLIOS
We construct portfolios to perform across a wide range of outcomes by complementing core equity exposures with fixed income, infrastructure, private investments and hedge funds to provide income, inflation protection and diversification benefits.
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MANAGING RISK IN UNCHARTED TERRITORY
Shifting tariff policies, geopolitical tensions, large fiscal deficits, historically elevated valuations and unprecedented market concentration underscore the importance of diversified portfolios. This is largely uncharted territory, with both economic growth and markets increasingly beholden to the success of AI.
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Speak with Our Team
If you are considering your investment approach for 2026 or would like to discuss any of the topics highlighted in the report, we welcome the opportunity to connect.
2026 Asset Allocation Perspectives and Market Outlook: Uncharted Territory
A forward‑looking perspective on 2026 market dynamics, from broadening AI adoption to the growing importance of thoughtful diversification.
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Note: All commentary sourced from Brown Advisory as of 12/31/25 unless otherwise noted. Alternative Investments may be available for Qualified Purchasers or Accredited Investors only.