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TL;DR
Singapore-based fund managers expect heightened geopolitical risk and volatility in 2026, but remain constructively positioned on Asia. Artificial intelligence (AI) remains a high-conviction structural theme, Asian credit presents selective income opportunities despite rising default risk, and emerging market equities and commodities, especially gold, are gaining renewed attention. For Singapore investors, the key takeaway is not broad risk-on optimism, but selectivity, income resilience, and operational efficiency in both portfolios and businesses.
Heightened Uncertainty Is the Baseline for 2026
The IMAS 2026 Investment Managers’ Outlook Survey, based on responses from 63 Singapore-based member firms managing over USD 35 trillion globally, makes one point clear: geopolitical risk is no longer a tail risk—it is a permanent feature of portfolio construction .
- 85% of respondents expect geopolitical risk and market volatility to rise
- 97% expect the US Federal Reserve to continue easing policy
- Views on global inflation remain split, underscoring macro uncertainty rather than consensus
For Singapore investors, this reinforces the importance of portfolio resilience over directional bets, especially given Singapore’s role as a regional capital and wealth hub.
Investment Theme #1: Artificial Intelligence Conviction Remains Firm
Despite growing public debate around AI valuations, 73% of surveyed fund managers do not expect an AI bubble to burst in 2026 .
This confidence is not framed around hype cycles, but measurable productivity and cost efficiency:
- 94% cite productivity gains as the primary reason for AI adoption
- AI is already deployed across investment research, fund commentary, compliance, distribution and HR
- Mid- and back-office functions are expected to face the greatest technology disruption
For retail and high-net-worth investors alike, AI exposure is increasingly indirect—embedded within operational efficiency of firms rather than standalone “AI stocks”. This supports a quality-bias approach, favouring companies and funds that can deploy AI at scale rather than experiment indefinitely.
Investment Theme #2: Asian Credit - Income First, Risk Selectively Managed
Asian credit remains a core area of focus, but with clear internal tension:
| Indicator | Survey Result |
|---|---|
| Expect higher corporate default risk | 64% |
| Expect JACI yields to fall by 50–100 bps | 34% |
| Most popular strategy for 2026 | Income strategies |
Current JACI yields stand around 5.32%, and expectations of yield compression suggest strong demand for high-quality Asian credit, even as default risks rise .
What this means
Income remains a priority for Singapore’s ageing investor base, but credit selection matters more than ever. Broad high-yield exposure may not be rewarded; instead, managers are positioning around quality, duration control and issuer fundamentals.
Investment Theme #3: Emerging Market Equities and Commodities Gain Traction
Two strategies have climbed meaningfully in investor attention:
- Emerging Market Equities (ranked #4)
- Commodities Strategies (ranked #5)
The renewed interest reflects portfolio diversification needs, not a return to aggressive risk-taking. Notably, over half of respondents expect gold prices to rise between 12.5% and 25% in 2026 .
Gold’s appeal lies in its dual role:
- A hedge against geopolitical and monetary uncertainty
- A potential return contributor in volatile macro environments
For Singapore investors already exposed to equities and property, gold and commodities serve more as risk stabilisers than growth engines—particularly relevant given currency uncertainty and global fragmentation.
Asia and Singapore Market Expectations
Despite macro headwinds, Asia remains the most constructive regional call:
- 72% expect MSCI Asia ex-Japan to rise 10–20% by end-2026
- 73% expect similar gains for MSCI China
- 52% expect the Straits Times Index (STI) to rise 5–10%
Importantly, 61% do not expect China’s GDP growth to accelerate, indicating that optimism is driven by valuations, policy support and sector-specific opportunities, not macro acceleration .
For Singapore equities, expectations are supported by:
- Resilient bank earnings
- Attractive dividend yields
- Government initiatives to revitalise the equity market
- Singapore’s position as a regional capital hub
Second-Order Implications for Investors
-
Income is structural, not tactical
The popularity of income strategies reflects demographics and risk tolerance, not short-term rate calls. -
Operational efficiency matters as much as returns
Rising costs and margin pressure mean fund selection should consider process scalability, not just performance. -
Diversification is shifting in form
Alternatives, commodities and EM equities are increasingly used to balance volatility, not chase excess returns. -
AI is an enabler, not an asset class
Investors should assess how AI improves execution and cost structures, rather than assuming linear upside from exposure.
FAQs
Is AI still a safe investment theme for 2026?
Fund managers remain confident in AI’s structural role, but returns are expected to come from productivity gains rather than speculative valuation expansion.
Why are income strategies still popular despite default risks?
Yield demand remains strong, especially among ageing savers, but managers are increasingly selective within Asian credit markets.
Does the IMAS survey suggest a bull market in 2026?
No. The survey reflects cautious optimism with an emphasis on selectivity, diversification and downside management.
What role does gold play in portfolios now?
Gold is viewed as both a hedge and a potential return driver amid geopolitical and monetary uncertainty.
Sources
- Investment Management Association of Singapore, IMAS 2026 Investment Managers’ Outlook Survey – Executive Summary
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