The Future-Focused Fund: Investing in Emerging Trends

In a world where financial markets evolve at breakneck speed, the ability to anticipate change is no longer a luxury—it is a necessity.

For investors seeking to thrive in 2026 and beyond, embracing emerging trends is critical for growth and resilience.

This guide delves into the transformative forces reshaping investment strategies, offering practical insights to navigate uncertainty and seize opportunities.

From artificial intelligence to private markets, we explore how to build a future-focused portfolio that adapts to dynamic economic landscapes.

Harnessing Artificial Intelligence for Growth

Artificial intelligence is revolutionizing the investment world, moving from hype to high-impact reality.

It drives productivity gains and cost advantages that can redefine competitive edges for firms and individuals alike.

Wealth management professionals are already saving hours through AI tools, enhancing communication and marketing efforts.

As AI scales from experiments to enterprise platforms, budgets for infrastructure are soaring, unlocking new efficiencies.

• Over two-thirds of wealth firms use generative AI, with half implementing it at scale.
• AI saves approximately three hours per professional on tasks like content creation.
• Talent is increasingly shifting toward AI expertise, with returns on investment emerging in specific domains.
• Next-generation investors favor strategies enhanced by AI, such as active ETFs and liquid alternatives.

This shift underscores the need for investors to integrate AI into their decision-making processes.

Embracing Innovation in Exchange-Traded Funds

The ETF landscape is undergoing a seismic transformation, with active strategies taking center stage.

Active ETFs are surging in popularity, capturing a growing share of inflows as investors seek flexible, cost-effective options.

This trend reflects a broader shift from mutual funds to ETFs, driven by innovations in product structures.

New developments, like ETF share classes for mutual funds, are making it easier to access diverse asset classes.

• In the US, active ETFs' share of ETF inflows rose from 1% in 2014 to 26% in 2024.
• Europe has seen active UCITS ETFs grow from 2.1% to 6.1% of assets under management since 2020.
• Fee structures are becoming a key focus, with active ETFs and share classes evolving to meet investor demands.
• Structural changes, such as converting UITs to open-end ETFs, enhance liquidity and accessibility.

By leveraging these innovations, investors can gain exposure to niche markets with lower costs.

Demystifying Private Markets for All Investors

Private markets are expanding rapidly, offering new avenues for diversification and yield.

With global alternatives assets under management projected to reach $32 trillion in five years, access is broadening through regulatory changes and product innovation.

Private credit, in particular, is set to double, providing higher yields and downside protection in volatile times.

Semi-liquid alternatives, like interval funds, are making private assets accessible to retail investors with monthly subscriptions and quarterly redemptions.

Regulatory shifts, such as the SEC lifting limits on private assets for closed-end funds, are enabling greater participation.

• Private credit offers attractive returns in real estate and other sectors, with hedge funds increasingly entering this space.
• Semi-liquid funds provide balance between liquidity and access, ideal for retirement plans.
• Retail-targeted alternatives are growing at over 50% CAGR, driven by demand for diversification.
• Partnerships between insurers and alternatives managers are creating permanent capital sources.

Investors should consider these options to enhance portfolio resilience.

Building Resilience with Tangible Investments

Real assets and commodities are becoming essential for inflation protection and portfolio stability.

In an environment of heightened economic uncertainty, assets like real estate and commodities offer inflation-linked cash flows.

Commodities such as copper and lithium are gaining attention as AI plays, supporting technology infrastructure needs.

Modest allocations to commodities can improve portfolio efficiency when inflation exceeds targets, acting as diversifiers.

• Real assets provide strategic hedging against inflation, with equity fundraising lagging in real estate.
• Debt strategies are preferred in real estate, offering higher yields and lower volatility.
• Commodities like energy and rare earths are critical for tech advancements, driving demand.
• Regulatory changes, such as tax subsidies in the US, are boosting investment in real assets.

By integrating these assets, investors can safeguard purchasing power and capture growth in essential sectors.

Crafting a Balanced Approach in Uncertain Times

Diversification remains a cornerstone of sound investing, but strategies must evolve with market dynamics.

A Total Portfolio Approach encourages rethinking asset allocation to include specialist strategies and private markets.

Emerging market equities, for instance, benefit from policy easing and cheaper valuations in regions like Korea and China.

High-quality fixed income becomes attractive as rates decline, providing income and stability in turbulent periods.

• Diversify with EM debt, securitized assets, and dividend stocks to spread risk.
• Use options and other derivatives to manage volatility and enhance returns.
• Incorporate undervalued equity sectors that may rebound with economic shifts.
• Leverage partnerships, such as those between insurers and alts managers, for long-term capital.

This holistic approach helps navigate the complexities of modern finance.

Navigating Risks and Opportunities

While opportunities abound, investors must remain vigilant to potential pitfalls in this evolving landscape.

Tech valuations are near highs after recent rallies, with sector risks from debt-fueled AI spending.

Real estate faces challenges like low liquidity and flat distributions, requiring careful selection of assets.

Margin pressures from low-cost vehicles and compliance costs add complexity to investment decisions.

• Monitor tariff uncertainty and geopolitical risks that can disrupt supply chains and markets.
• Assess the sustainability of AI-driven growth, as tech sector shifts to capital-intensive phases.
• Be aware of regulatory changes that may impact access to alternatives and product structures.
• Balance innovation with caution, ensuring portfolios are not overexposed to volatile trends.

By staying informed and agile, investors can mitigate risks while capitalizing on emerging trends.

The journey to future-focused investing demands adaptability and a willingness to explore new frontiers.

Embrace these trends to build a portfolio that not only survives but thrives in the years ahead.