Investors tilt to active, private markets as geopolitics and inflation squeeze 2026 outlook
Almost 8 in 10 North American institutional investors think 2026 brings a market correction – and they are already positioning for it.
A new survey from Natixis Investment Managers (Natixis IM) and CoreData Research finds 79 percent of North American institutions expect a pullback next year.
On average, they assign a 49 percent chance of a 10–20 percent decline and a 20 percent chance of a drop greater than 20 percent. The study polled 515 institutions globally in September and October 2025, including 95 in North America overseeing more than $6.79tn in assets.
For Canadian allocators, the results map out where the “smart money” sees the biggest risks and how portfolios are shifting.
Geopolitics and policy: from background risk to portfolio driver
Geopolitical risk now sits near the top of the agenda.
Among North American respondents, 43 percent cite geopolitical shock as a key threat, and 75 percent say political disfunction in major markets is increasingly destabilising. Another 71 percent believe a realignment in global security will force investors to rethink investment theses for specific countries.
China is central to that concern.
Some 57 percent fear a South China Sea conflict, and 66 percent point to rare earth dominance as a structural vulnerability.
Yet 60 percent still think markets will remain indifferent to these flashpoints, at least in the near term.
Recession risk is higher but not yet the base case.
The share of North American investors worried about recession rises from 20 percent for 2025 to 38 percent for 2026, even as 60 percent think the current rally still has room to run.
Nearly 69 percent warn that slow growth could be a harbinger of recession.
Inflation, tariffs, and the Fed’s tightrope
Inflation has moved back to the foreground.
Nearly half (47 percent) of North American institutions think the tension between inflation and employment will force difficult choices at the US Federal Reserve. Four in ten (40 percent) now view re‑inflation as a key risk, up from 24 percent in 2025.
Tariff policy is feeding those worries.
Some 61 percent say tariffs are fuelling renewed price pressures, and investors are split on the trajectory of the trade war, with 56 percent expecting it to continue and 44 percent expecting it to ease.
The labour side of the mandate does not provide comfort.
Two‑thirds (66 percent) of North American investors anticipate higher unemployment, and a third (33 percent) believe labour‑market weakness will accelerate rate cuts.
What keeps CIOs up at night
For 2026, North American institutions rank their top portfolio risks as:
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Valuations (63 percent)
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Inflation (54 percent)
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Concentration risk (43 percent)
Volatility is expected to pick up as well, with 61 percent looking for higher equity volatility and 39 percent expecting more bond volatility.
In response, investors are adjusting both their risk frameworks and their toolkit.
More than seven in ten (71 percent) believe a 60:20:20 portfolio – equities, fixed income, and alternatives – will outperform the traditional 60:40 split.
Nearly two‑thirds (63 percent) expect active strategies to be favoured in 2026. In fixed income specifically, 68 percent say active management is essential.
Equities: cautious upside, narrow leadership risk
Despite concerns about a correction, North American institutions are not abandoning equities. About 69 percent expect rate cuts to help push the S&P 500 higher next year.
They are, however, more selective:
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Defence stocks draw the strongest conviction, with 81 percent bullish.
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Most respondents (66 percent) expect gains to broaden beyond the narrow leadership of the past few years.
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At the same time, 62 percent worry that a significant new AI technological development could bring concentration risk back to the forefront.
The sector skew reflects those tensions.
Some 62 percent expect the information technology sector to outperform the market, 44 percent favour the energy sector, and 41 percent favour the utilities sector.
Only 12 percent see consumer discretionary outperforming, signalling concern over weakening consumer strength heading into 2026.
Magnificent 7 sentiment remains constructive but tempered: 55 percent of North American investors are bullish on those names, while 40 percent now cite an AI‑driven tech bubble as a risk, up from 25 percent in 2025.
Bonds: rate cuts support, default risk rising
On the bond side, investors see both opportunity and credit risk.
Nearly half (47 percent) of North American institutions expect the inflation–unemployment trade‑off to force tough Fed decisions, and 57 percent anticipate one to two rate cuts in 2025.
That underpins a cautiously positive view, with 58 percent bullish on fixed income.
At the same time, 54 percent foresee higher corporate defaults.
Many institutions are still adding investment‑grade, high‑yield, and emerging‑market debt to secure income in an uncertain inflation backdrop, but they are leaning on active security selection to manage downside risk.
Private markets and crypto: expanding the toolkit, tightening the filter
Private assets remain a core allocation. Looking to 2026:
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45 percent of North American institutions plan to increase private debt allocations.
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34 percent plan to increase private equity allocations.
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Confidence is high, with 67 percent bullish on private equity and 63 percent on private debt.
Deal discipline is tightening.
Nearly 79 percent say they are applying greater scrutiny to private deals because of overcrowding.
Crypto is moving from fringe idea to qualified opportunity.
Some 44 percent of investors now consider crypto a legitimate opportunity, up from 38 percent in 2025, but only 20 percent currently have exposure.
By 2026, 45 percent of North American investors expect to be invested, and four in ten existing holders plan to increase allocations.
More than half (53 percent) think more accommodative US regulation would be a turning point for global adoption.
Global allocations: edging away from US political risk
Finally, institutions are re‑examining their home bias.
Globally, 63 percent say the politicization of US institutions weakens the country’s investment appeal, a view shared by 57 percent of North American investors.
Global respondents now lean slightly toward Europe (52 percent) over the US (48 percent) on performance expectations.
North American institutions still see strength at home—60 percent expect US markets to outperform—but they also plan to diversify abroad.
Roughly 68 percent expect stronger international performance overall and intend to increase allocations to Europe (30 percent), Asia‑Pacific (34 percent), Latin America (22 percent), and especially emerging markets (38 percent).
