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In 2026, Franklin Templeton analysts see investment opportunities across global capital markets – driven by attractive profit growth outside of the US and by global monetary policy – easing. They identify three themes that will define the coming year: broadening, steepening and weakening.

Broadening reflects Franklin Templeton’s conviction that investment opportunities across regions and asset classes are expanding

Steepening refers to yield curves, where falling short-term interest rates are predicted to incentivise investors to move out of cash holdings and into risk assets, including equities, credit and fixed income duration. In their view, emerging debt and equity markets, European equities and US smaller-capitalisation stocks should lead the way in 2026.

A weakening US dollar also bodes well for emerging debt and equity markets, and is an important development for portfolio management and hedging strategies. Still, US equity returns, including in tech, are expected to remain strong.

Turning to the longer term, Franklin Templeton analysts believe the rest of the decade will be dominated by themes of: the age of intelligence, the mainstreaming of private markets and an era of big government.

Longer term, the key driver of returns remains innovation, above all in the information technology sector, private investments and digital finance. Within private markets, commercial real estate debt, infrastructure and secondary offerings of private equity are their preferred areas.

However, after deglobalisation, the next manifestation of big government is predicted to be large fiscal deficits due to political dysfunction, demographics, national security needs and fiscal stimulus. This risks lowering returns and increasing risk across capital markets until 2030.