Schroders London Investment Conference 2026: seeing through the noise
Amidst many topics raised at this year’s annual conference – from geopolitical stresses to valuation risk and debt sustainability – there was a clear message that shifting market dynamics offer opportunities.
Politics creates a lot of noise in the near term, but the trends that really matter to markets develop over longer timeframes. These bigger themes were the recurrent topics at this year’s London Investment Conference, where investors and other specialists gathered to pose questions, share insights and seek opportunities.
On one broad point attendees agreed: a world which is subject to significant, far-reaching change – including the formation of new power alliances and increasing fiscal fragility, among many other trends – presents investors with both risks and opportunities.
From an economic viewpoint, “the bearish narratives are overblown”
Despite turmoil in the headlines, the global economic backdrop is supportive. George Brown, Senior Economist, said: “We anticipate solid global growth of 2.6% this year and forecast inflation to come down. However, we see divergence across regions.
“The US continues to enjoy solid growth and a resilient labour market. It is not an economy that necessarily requires stimulus. However, interest rates were cut in the latter part of 2025 and stimulatory effects of Trump’s Big, Beautiful Bill will be felt through 2026. A concern is that stimulus could lead to increased demand for labour, at a time when labour supply via immigration is constrained. That could risk a resurgence of inflation.
“We see the European Central Bank keeping interest rates on hold this year. Growth is poised to receive a boost from increased defence spending which, importantly, is largely being directed towards European manufacturers.
“The UK economy remains constrained by chronically weak productivity growth since 2008 and rising unit labour costs since Brexit. This has led to inflation remaining sticky. However, measures in the November 2025 Budget to bring down inflation could open the door to a further rate cut from the Bank of England this year.
Geopolitics causes disruption, but fundamentals still matter
While geopolitics matters, Schroders Group Chief Investment Officer Johanna Kyrklund (pictured above) emphasised keeping sight of what really drives markets, and protecting portfolios via diversification:
“Geopolitical newsflow grabs the headlines but fundamentals like inflation and monetary policy still matter. The outlook for medium-term interest rates is what drives valuations.
“We’ve recognised for a while that we’ve moved from a globalising world with a risk of deflationary shocks to a deglobalising world with a risk of inflationary shocks. This is the populist playbook.
“Populism in the West is leading to looser fiscal policy, which is good for nominal growth and supportive for equities. But additional spending, for example on stimulus or defence, could imperil the sustainability of government debt. We see this as the biggest risk out there. While not an immediate threat, it could be what ultimately puts an end to this equity bull market.
“The great challenge posed by geopolitics is that you cannot predict or time events. You can only protect yourself through diversification. The key is to own diversifying assets that you like for other reasons too. One example is gold, which could do well if those worries over the sustainability of government debt intensify and can also pay off when geopolitical risks are elevated.”
High valuations are another worry for some investors, but there are strategies to deal with that risk without resorting to cash, said Johanna Kyrklund:
“Investors are facing somewhat elevated valuations for both equities and bonds, but it’s not time to move into cash. For example, for those worried about valuations in US technology and AI, value stocks could be a hedge. The UK’s ‘old economy’ stock market also presents an interesting option.”
After the US rally, is it emerging markets’ time to shine?
The current US bull market is the second longest in more than a century. But is investor focus shifting now toward emerging markets? This session sought views from Sir Sebastian Wood, Chairman of Schroders China; Tom Wilson, Head of Emerging Market Equities and Abbas Barkhordar, fund manager. They provided different perspectives.
On China’s prospects and its relations with the US, Sir Sebastian said: “In a turbulent geopolitical period there’s some consolation in the fact that the faultlines between the US and China are relatively calm. Both China and the US want broad economic agreement to support growth. The signs are that we will have an optically successful summit.”
On EM performance in 2025, and looking ahead to 2026, Abbas said: “Last year EM outperformed substantially, and overall AI spend drove a lot of that outperformance.
“With AI a lot of the spend starts in the US, but much of the manufacturing is then taking place in emerging markets – in particular Taiwan and South Korea. Looking ahead through 2026 we expect this outperformance to be broadening out across other sectors.”
Tom Wilson agreed that opportunities through 2026 would arise in a range of sectors and countries. “We see a good breadth of non-tech, non-AI opportunities,” he said. "Chinese industrials are highly competitive and we can find companies with plenty of runway to grow export market share.” He also cited opportunities in Latin America including Brazil and Peru. In India, while growth is picking up, “valuations remain relatively rich”.
Gold and bitcoin: similar assets serving similar purposes?
Johanna Kyrklund had raised gold as a diversifier at the start of the day, but the precious metal became a central topic in a later session when James Luke, Senior Portfolio Manager Gold and Commodities, appeared in a panel alongside Nicolas Vanhoutteghem of Forteus.
James’ key point was that despite gold’s 65% rise in 2025 the demand for the asset – from central banks and large investors – remains significant enough to fuel substantial further price growth.
“China is key,” he said. “Central banks in general have been buying aggressively since 2022, but China is the bank with the biggest runway. China’s central bank gold holdings currently sit at an official 8% of total assets. If China were to move up from 8% to 20%, more in line with other emerging market central banks, you're talking about buying a full year of global annual production.”
Institutional investors are similarly likely to build exposures from currently low levels. “Uncertainty is driving a demand shock,” he said. “We don't quite know what the great power rivalry between US and China is ultimately going to lead to. We don’t know how the fiscal fragility that stalks the US, European and Japanese economies will unfold. These problems are unresolved, and the demand runway for gold as a diversifier is long.”
- Read more in-depth analysis from James Luke: Gold and gold equities: after a record-breaking rally, what lies ahead?
Turning to gold equities he cited last year’s “explosive” performance but emphasised one key point: that gold miner shares are still cheaper today – relative to the price of gold itself – than in 2020 when miners’ margins were less than half what they are today.
Switching topic from gold to bitcoin Nic Vanhoutteghem, President of Forteus, said the crypto currency was today “rather like gold was 20 years ago”. He pointed out that gold had been primarily a retail investor play until the early 2000s when it became a financial asset more widely owned by institutional investors. “This process is happening quickly with bitcoin,” he said, citing large inflows into BTC ETFs in recent years, with these ETFs now among the currency’s largest holders.
He pointed out the distinction between bitcoin the asset, and the blockchain code on which it is constructed, which is now being rapidly deployed across other parts of the investment industry.
“If you hold zero bitcoin for your clients, you might argue you are being cautious, but you are also being actively underweight,” he said. “You are underweight both the asset and the technology.”
Opportunities to diversify within equities
Aside from geopolitics, other risks facing investors include concentrated markets. How to diversify equity exposure is therefore an important consideration for many investors.
“Value stocks can give you diversification in two ways”, said Simon Adler, Head of Value Equities. “Firstly, it’s a way to remain invested in equities when broader equity markets are looking more expensive. Secondly, there’s the diversification within the value space. Value used to be thought of as banks, oil companies and miners but that’s not the case anymore. It’s a very diverse opportunity set and even includes technology, albeit of the ‘old economy’ variety such as printer manufacturers.”
Passive exposure to value may not bring the diversification investors are seeking. “The risk of passive is that you might still end up with unintended concentrated exposure towards a particular sector”, said Simon Adler. “In addition, some of the stocks will be ‘value traps’ that are cheap for good reason”.
There are still opportunities for growth investors who are prepared to look at where the market consensus may be wrong. Charles Somers, Portfolio Manager, Global Equities, said “Our process in the Global Equities team is focused on identifying unanticipated growth, or what we call ‘growth gaps’. That means looking for where consensus earnings expectations are below our estimate of a company’s long-term potential.
“We can find these across many sectors. European banks are a good example from a couple of years ago. We found that the market was not correctly anticipating how rising interest rates would benefit the banks’ earnings prospects.
“An investor’s overall portfolio can have both a value equity and a growth equity sleeve. They are very complementary and work at different points of the economic cycle.”
Private equity: improved access for investors
Another option for investors is to consider private equity. “There are three factors propelling increased interest in private equity,” said James Lowe, Business Development Director UK, Private Markets. “These are the investment case for private equity, policy driving new products and increased access, and client awareness.”
In terms of policy, Richard Fox, Head of Public Policy, made the point that UK regulators are seeking two outcomes: “Firstly, they want growth in individuals’ portfolios. In general, people are not saving enough, or if they are saving then that money is not working as hard as it could. Secondly, they’re trying to grow the economy and the companies of the future.
“There are new vehicles that are improving access to private equity. Long-term asset funds (LTAFs) bridge the gap between liquid and illiquid assets and will soon become eligible for inclusion in standard stocks and shares ISAs. Meanwhile, work is ongoing between the financial industry and regulators to enable access to LTAFs within SIPPs.”
On the investment case for private equity, Paul Lamacraft, Senior Investment Director, Private Equity, highlighted the positive momentum from late 2025. “The early part of 2025 did see slower activity in terms of transactions, exits and distributions. But activity picked up in Q3 and continues to gather pace as we move into 2026.
“Lower interest rates could be positive for the large cap part of the market, but we still favour the small and mid-cap segment. It’s less about high leverage and more about investing into and growing the business. In small and mid-cap companies, there are more levers you can pull to improve that business, increase profitability and hence generate attractive and consistent returns.”
A poll of the audience revealed that liquidity is the main concern when it comes to private equity. Natalie Krekis, Portfolio Director, Cazenove Capital, said “The key here is understanding a client’s goals holistically. At Cazenove we talk about segmenting client’s wealth into three parts: liquidity, lifestyle, and legacy. An understanding of how much of their wealth a client needs to hold in the 'liquid' bucket is essential to then be able to calculate how much they could allocate to the 'legacy' bucket which is where private markets sit.
“From an investment perspective, allocations to private assets can improve diversification, obtain access to a different fishing pool while also gaining access to innovative companies on a global scale. We make use of all the structures to access private markets, but it needs to be appropriate to the specific client and it is never one size fits all.”
Fixed income: stay alert to the changing narrative
"It's all about interest rates” was the message from Julien Houdain, Head of Global Unconstrained Fixed Income. “The good news is that real (inflation-adjusted) yields are still attractive across the G7 markets. But you have to be very careful where you park your capital.
“Markets were surprised in 2025 by more fiscal stimulus than expected from Japan and Europe, and the implications for interest rates. Investors need to pay attention to any surprises regarding the market narrative in 2026. The main risk for fixed income markets would be US interest rates moving higher.
“We do need to acknowledge that many countries, especially in developed markets, have too much debt. There will be periodic flare-ups where investors worry about the sustainability of that debt, as we saw in the UK in 2022.
“Turning to credit markets, spreads are very tight so you get little reward for taking on corporate credit risk. There are some opportunities out there, but you need to be active to find them. Passive exposure to credit means buying expensive assets.”
Exploring the rise of Nvidia
Wrapping up the conference was Stephen Witt, author of The Thinking Machine, the acclaimed book which won the 2025 Financial Times and Schroders Business Book of the Year Award. The book explores the rise of Nvidia from designing video game equipment to becoming the world’s most valuable company.
Stephen Witt described how insiders at Nvidia view the period 2001-12 as the most important for the company. This was when they were building their technology and getting ahead of any competitors. By focusing on two out-of-favour technologies (neural networks and parallel computing) Nvidia was able to build a monopoly. “There was no evidence at that time that Nvidia was going to succeed”, observed Witt. “But the risk of not doing it, and someone else getting there first, was a bigger risk”.
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