Global investing outlook 2026: Why investors may look beyond the US; how AI, rate cuts and a softer dollar will shape returns

Global investment opportunities are set to widen meaningfully in 2026, as easing monetary policy, a weakening US dollar, and profit growth outside the United States reshape capital flows, according to a Franklin Templeton report.

The asset manager report titled ‘Global Investment Outlook 2026 and Beyond’

said that global markets are entering a phase where returns are likely to “broaden” across regions and asset classes,

moving away from the US-centric leadership seen recently, even as American equities—particularly technology stocks—remain resilient.” “In 2026,

opportunities across global capital markets,

we foresee broadening opportunities across global capital markets, driven by attractive profits growth outside the United States and by global monetary policy easing.”

the report said. Franklin Templeton identified three cyclical forces defining the near-term landscape—widening, steepening, and weakening.

‘Broadening’ reflects expanding opportunities across geographies and asset classes; ‘steepening’ points to yield curves as short-term rates fall faster than long-term yields; and ‘weakening’ refers to the US dollar.

which the firm expects to remain under pressure. Yield curves are likely to steepen as central banks cut policy rates, reducing the appeal of cash and pushing investors towards equities, credit and longer-duration fixed income. “

Falling short-term interest rates will incentivise investors to move out of cash holdings and into risky assets.”

The report said that cyclically sensitive sectors, such as finance, industry, and smaller companies, could benefit.

The US Federal Reserve resumed rate cuts in September 2025 after a nine-month pause and is expected to continue easing into the first half of 2026.

even as inflation remains above target. Franklin Templeton said this policy backdrop reinforces its broadening thesis, encouraging investors to look beyond traditional safe assets.

The US dollar has already fallen about 10% on a trade-weighted basis this year, and the report suggested the decline may not be over. “

Weakening of the US dollar tends to reinforce a broadening of returns across capital markets, by region, sector, and asset class.”

it said, highlighting positive implications for emerging market debt and equities.

Looking beyond 2026, Franklin Templeton outlined three long-term themes likely to shape portfolios over the coming half-decade—the age of intelligence,

The report also highlighted the mainstreaming of private markets and the emergence of big government.

Artificial intelligence remains central to the long-term investment case, but the report stressed that AI deployment is still in its early stages. “

Its contribution to growth, social welfare, and investment returns is just beginning.”

Franklin Templeton spoke, pointing to continued opportunities in data centres, advanced semiconductors, and AI-enabling infrastructure.

A key constraint—and opportunity—lies in energy. The need to feed AI’s vast energy appetite is one of the most compelling investment themes.

The report noted, flagging rising electricity demand and spillover benefits for engineering, industrial metals and power infrastructure. Private markets are also expected to play a larger role as investors search for income and diversification in a lower-rate environment.

Franklin Templeton identified commercial real estate debt, infrastructure, and secondary private equity offerings as his preferred areas as cash yields declined. Simultaneously,

The report cautioned that an increase in government intervention could potentially reduce returns. “We have entered an era of big and intrusive government,

which risks lowering returns and increasing risk across capital markets over the remainder of this decade.”

it said. Franklin Templeton said investors will need to adapt their portfolios to a world where leadership is dispersed.

Policy uncertainty remains elevated, and innovation—particularly in technology, private assets, and digital finance—continues to be the dominant long-term driver of returns.