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Summary

This bi-annual outlook survey is designed to give a view across our investment teams. The Franklin Templeton Institute identifies the median across answers and develops commentary on the year ahead. We surveyed our investment teams across all our asset classes: equity, private equity, fixed income, private debt, real estate, digital assets, hedge funds and secondary private markets.

The goal of the Global Investment Management Survey is to provide the most comprehensive global view on the dimensions that matter most to our clients.

The findings reflect the average of the group. While each of our investment teams are independent and have different outlooks, the survey serves as a starting point in understanding Franklin Templeton’s aggregate views on the economy, equities, fixed income and alternatives.

Survey results as of November 2025. Market data as of November 30, 2025. Fed data is as of December 10, 2025.

Exhibit 1: Expectations for 2026 Based on the Franklin Templeton Global Investment Management Survey

Focus on Quality Across All Asset Classes

Source: Franklin Templeton Institute Global Investment Management Survey expectations are for the year 2026 and are as of November 2025. Survey methodology included at the end of the paper.

Key takeaways

Economic growth accelerating modestly

  • Global growth will be slightly better than consensus forecasts.
  • We expect core PCE to approximate 2.5%–3% and will likely remain above central-bank targets.
  • Unemployment will rise but remain relatively low in the United States and will end the year between 4.50%–4.75%.
  • The US dollar will remain rangebound and essentially unchanged by the end of 2026.
  • We do not expect a recession in 2026.

 

Equities likely to end 2026 at 7000–7400 (S&P 500 Index target)

  • Earnings will grow at 8%–13% versus consensus 14.2%.

FAVOR

  • US large-cap stocks. We expect the stock market to continue to broaden out and are bullish emerging markets, Japan and US small caps.
  • Sector focus on industrials, health care, and technology.
  • Factors to focus on include free cash flow yield, return on invested capital and return on equity.

RISKS

  • Geopolitics, earnings below expectations, Fed misstep.
     

Corporate credit and short duration will benefit from strong fundamentals and declining interest rates in 2026

FAVOR

  • High-yield bonds are attractive. Default rates for high-yield debt are likely to stay low during 2026, however spreads should modestly widen but remain relatively tight in
  • a sector with low-interest rate risk and high all-in yields.
  • Shorter duration fixed income will be in favor particularly during the first half of 2026, as rates will come down modestly and slowly during the year.
  • Municipals will continue to be a high-quality, diversifying investment option with attractive tax-free yields as fundamentals remain solid and the challenges of record supply levels abate and support valuations.

RISKS

Geopolitics and central bank missteps.

WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal.

Fixed income securities involve interest rate, credit, inflation and reinvestment risks, and possible loss of principal. As interest rates rise, the value of fixed income securities falls.

Equity securities are subject to price fluctuation and possible loss of principal.

Investments in lower-rated bonds include higher risk of default and loss of principal. Changes in the credit rating of a bond, or in the credit rating or financial strength of a bond’s issuer, insurer or guarantor, may affect the bond’s value.

International investments are subject to special risks, including currency fluctuations and social, economic, and political uncertainties, which could increase volatility. These risks are magnified in emerging markets.

Alternative strategies may be exposed to potentially significant fluctuations in value.

Privately held companies present certain challenges and involve incremental risks as opposed to investments in public companies, such as dealing with the lack of available information about these companies as well as their general lack of liquidity.

Real estate securities involve special risks, such as declines in the value of real estate and increased susceptibility to adverse economic or regulatory developments affecting the sector.

Because municipal bonds are sensitive to interest-rate movements, a municipal bond portfolio’s yield and value will fluctuate with market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in an investment portfolio adjust to a rise in interest rates, the portfolio’s value may decline. Changes in the credit rating of a bond, or in the credit rating or financial strength of a bond’s issuer, insurer, or guarantor, may affect the bond’s value.

Dividends may fluctuate and are not guaranteed, and a company may reduce or eliminate its dividend at any time.

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This document is intended to be of general interest only. This document should not be construed as individual investment advice or offer or solicitation to buy, sell or hold any shares of fund. The information provided for any individual security mentioned is not a sufficient basis upon which to make an investment decision. Investments involves risks. Value of investments may go up as well as down and past performance is not an indicator or a guarantee of future performance. The investment returns are calculated on NAV to NAV basis, taking into account of reinvestments and capital gain or loss. The investment returns are denominated in stated currency, which may be a foreign currency other than USD and HKD (“other foreign currency”). US/HK dollar-based investors are therefore exposed to fluctuations in the US/HK dollar / other foreign currency exchange rate. Please refer to the offering documents for further details, including the risk factors.

The data, comments, opinions, estimates and other information contained herein may be subject to change without notice. There is no guarantee that an investment product will meet its objective and any forecasts expressed will be realized. Performance may also be affected by currency fluctuations. Reduced liquidity may have a negative impact on the price of the assets. Currency fluctuations may affect the value of overseas investments. Where an investment product invests in emerging markets, the risks can be greater than in developed markets. Where an investment product invests in derivative instruments, this entails specific risks that may increase the risk profile of the investment product. Where an investment product invests in a specific sector or geographical area, the returns may be more volatile than a more diversified investment product. Franklin Templeton accepts no liability whatsoever for any direct or indirect consequential loss arising from use of this document or any comment, opinion or estimate herein. This document may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

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Unless stated otherwise, all information is as of the date stated above. Source: Franklin Templeton.

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