Portfolio Perspectives video Q2 2026

Hi and thank you for joining me for a preview of this quarter’s Portfolio Perspectives. Today, we’re diving into the key trends impacting investor portfolios. Now, after three years of strong, double-digit global equity performance, equity markets have hit a bit of a rough patch. We’ve faced some significant disruptions—a U.S. government shutdown, an energy shock, and persistently high inflation to name a few. Naturally, these events have raised investor concerns.

But here’s the silver lining: the U.S. economy—and many economies around the world—have shown remarkable resilience. They’ve absorbed these shocks in stride and continued to move forward, but not without some near-term volatility.

Now the rotation in global equity markets that started last year continues with non-US equities outperforming US, large cap value outperforming large cap growth. And small caps outperforming large caps. While fixed income volatility has spiked, government yield levels remain at levels around the same range they have been since mid-2023. And despite recent widening of credit spreads related to the war in Iran and the related energy shock, spreads remain fairly tight relative to history.

So in this quarter’s edition of Portfolio Perspectives, one area we dig deeper on is the changing dynamics in the technology and financial services sectors. Now these two sectors are expected to be key drivers to earnings growth in 2026. Technology should be the primary driver both due to the size of the sector as well as the underlying earnings strength related to the rapid adoption of artificial intelligence, but their business models might be entering into a transitional phase. Technology companies have enjoyed incredible economies of scale with capital light structures. However, the buildout of artificial intelligence is proving to be a much more capital intensive due to the large data center requirements to compete in AI – this buildout is so massive, even companies will billions of dollars in cash flow are still tapping credit markets to support capital expenditures. In addition to the infrastructure buildout, these data centers are costly to run and maintain with energy, cooling, and chip replacement costs, so they have much higher carrying costs. This all suggests that these companies are transitioning to a much more capital intense business model that could impact their rich margins and capital light business models. Now our Global Investment Strategist Rob Almeida has written extensively of this dynamic in a recent Strategist Corner.    

Turning to financials, which is the second largest sector in the S&P 500, we also see a changing regulatory landscape that could be beneficial to certain companies, particularly in the banking industry. Now in the years following the global financial crisis, significant restrictions and regulatory controls were imposed on banks including the Dodd Frank Act, the Basel III accord and Leveraged Lending Guidance. While many of these regulations were intended to prevent a future crisis, some argue they were overly restrictive and stifle lending activity. Now today, there is an effort underway by the Trump administration and the banking regulators to loosen some of the regulatory and capital constraints, which could free up capital and allow for greater mobility of lending activity, or allow reallocation of capital for share buybacks, dividends or corporate actions.

So what are the implications for your portfolio? As investors assess their country and sector and capitalization exposures, we see the recent broadening of markets from growth to value and large to small as a healthy dynamic. However, some portfolios have become overly concentrated in recent years in US large cap equities following several years of strength, so we encourage a drill down and thorough assessment of your country, style, sector and market capitalization concentrations to be sure your portfolio is appropriately diversified.

For further insight on these and other topics, please see this quarter’s Portfolio Perspectives.

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