Broadening Opportunity Sets And Disciplined Diversification In A Shifting Market Cycle

In his responses for the Asian Private Wealth Investment Outlook 2026, Ian Marsh, Chief Investment Officer at Saltoro Capital, sets out a constructive yet disciplined investment framework shaped by easing inflation, expected interest-rate cuts, and a gradual broadening of market leadership beyond mega-cap technology. He highlights opportunities across US mid- and small-cap equities, Japanese stocks, emerging market bonds, and high-quality government debt, while remaining mindful of volatility risks linked to geopolitics, fiscal pressures, and US midterm uncertainty. Across portfolio construction, alternatives, thematic positioning, and safe-haven assets, Marsh emphasises diversified core–satellite portfolios, selective use of active management, and carefully curated alternative exposures as central to navigating an increasingly complex investment environment in 2026.

Market Outlook 2026:What are the key opportunities and risks you anticipate for major global and Asian equity and fixed-income markets in the coming year?

Opportunities:

• US equities: Supportive government policies and midterm election incentives are expected to boost economic growth and company earnings, particularly for mid-cap and small-cap stocks. AI-related investments continue to drive broader economic activity, benefiting supply chains.
• Japanese equities: Attractive valuations, corporate reforms and improving governance mean we see an attractive opportunity in Japanese equities.
• Emerging markets: Lower interest rates and a weaker dollar are likely to support emerging markets, and we see a particular opportunity in emerging market bonds.
• Government bonds: Easing inflation and further interest cuts are likely to create a favourable backdrop for high-quality government bonds.

Risks:

• Volatility: Volatility is likely to remain a feature of the investment landscape due to geopolitical tensions and the potential for uncertainty ahead of the US midterm elections.
• AI valuation concerns: While we have seen a series of high-profile warnings about a bubble in AI-related equity valuations, we expect the noise around these concerns to ease as investors’ attention is increasingly focused on the run-up to the US midterms.
• Government debt: We are mindful that investor concerns about governments’ fiscal policies could have a negative impact on bonds, particularly at the longer-dated end of the market.

New risks will inevitably emerge along the way, which is why we believe diversified portfolios are the most effective way to navigate the evolving investment landscape.

Portfolio Construction: For a medium-risk private wealth client, how would you position portfolios across equities, fixed income, cash, and alternatives—and what regional tilts would you prioritise?

The Saltoro model portfolios are run on the “core/satellite” principle and use equity exposure as a proxy for risk. A medium risk client would have a core of 60% equities, with the remainder in fixed income, liquid alts and cash. The allocation to satellites is aimed at capturing excess returns and/or providing downside protection. Core positioning:

Equities:

• We have reduced exposure to expensive US tech giants and increased our allocation to undervalued areas of the US market. We have also modestly increased our exposure to Japanese equities, which look attractively valued. We continue to see an opportunity in infrastructure companies and have maintained our exposure. Overall, we continue to maintain balanced regional exposure with a focus on quality companies.

Fixed Income:

• We have increased our allocation to government bonds (UK gilts and global government bonds), which look attractive from a risk/return perspective. We have reduced exposure to corporate bonds and high yield bonds.
• We have increased our allocation to emerging market bonds, which offer attractive yields and where, in many cases, government debt levels are lower than in developed economies.

Cash:

• Cash and money markets funds are becoming less attractive as interest rates fall.

Alternatives:

• Shift from gold (after strong price rise) to industrial metals (aluminium, copper, nickel) for potential gains linked to supply disruptions and manufacturing demand.

Alternatives Demand: To what extent are you seeing increased client interest in private credit, private equity, real estate, infrastructure, hedge funds, or commodities—and are you proactively encouraging these allocations?

There has been a significant uptick in client interest in alternative strategies due to the democratisation of previously illiquid and opaque markets. Saltoro believes that carefully curated and managed portfolios should form part of the HNW clients’ overall asset allocation, with due diligence a vital and integral part of the asset allocation.

Our growth portfolio targets returns in excess of public equity markets, with similar or lower volatility, whilst our diversified portfolio aims to outperform a balanced portfolio of public market bonds and equities, but with significantly lower volatility.

Whilst our clientele understands the illiquidity premium, a decade long commitment is a stumbling block. Clients are now embracing the semi-liquid nature of Evergreen products, with significant uptick in allocation.

Growth portfolio allocation

• Co-investments, via both single manager platforms and multiple GP sponsors, along with secondaries, which embrace multiple GP led and LP driven transactions, form the backbone of the portfolio, with a modest allocation to Venture PE and to Quant, Crypto and Equity L/S hedge funds

Diversified portfolio allocation

• Multi Strategy funds, using single and multiple GPs, along with diversified funds using Co-investments and Secondaries, form the “equity” portion of the portfolio. Private Credit funds act as the bond proxy with exposure to funds with both Single and Multiple sponsors and an emphasis on low LTV and first liens. Finally, large and established Global Hedge Fund of Funds act as a lower volatility diversifier.

Active vs. Passive & Thematic Drivers: How are you balancing active and passive strategies for 2026, and which structural themes (e.g., AI, energy transition, demographics) are shaping your positioning?

We believe that both passive and active strategies are important building blocks of diversified, global portfolios. The core section of the model portfolios leans into what we see as the thematic shift to a broadening of market performance. Continued investment in AI infrastructure is benefiting supply chains and supporting economic growth. In combination with supportive US government policy and falling interest rates, we expect this to result in a broadening out of performance from the tech giants to a wider range of US companies.

Exposure to the thematic drivers is achieved by both passive and active instruments. In certain areas we see active management having the potential for delivering significant excess alpha, such as in US Smaller Companies, whereas Government Bond exposure is best delivered through passive instruments.

Satellite holdings include what we view as long term trends, which include Healthcare and Technology, whilst Infrastructure funds and commodities in general will benefit from a necessary replenishment of both technological and physical infrastructure.

Digital Assets & Safe Havens: How are you approaching gold, other safe-haven assets, and digital assets—including tokenised products—within private wealth portfolios? Is client demand rising, stabilising, or shifting?

The strong rise in the gold price and ‘FOMO’ buying leaves gold more vulnerable to short-term pullbacks. We have trimmed our positions. However, we believe that in the medium term the case for gold remains in a world of heavy government debt and geopolitical tensions.

The jury is still out on the case for digital assets as a safe haven. It seems that Bitcoin and Etherium have entered the mainstream with exchange traded products from market heavyweights listing in several markets. However, we have yet to see whether they deserve safe haven status: concerns remain over custody and they have yet to weather a severe market dislocation.

The iPhone revolutionised mobile phones and has led to a smartphone in everyone’s pocket. Tokenised tech has yet to have a killer app that drives adoption, making the tech simple and clear enough for everyone to have faith in and adopt. We are not seeing any demand – yet.