Equity markets have started 2026 with significant volatility. According to Mary Ann Bartels, CIO at Sanctuary Wealth, this reflects the typical turbulence associated with midterm election years, which are usually marked by corrections followed by strong rebounds. Despite the challenges, the S&P 500 aligns with historical patterns, supporting an optimistic outlook and emphasizing the importance of diversification.
In the view of Marlen Lopez, Senior Wealth Advisor and Founding Partner at Excelsis Global Private Wealth, for Latin American investors the main market drivers for this year include currency performance, commodity prices, and global exposure. “The U.S. dollar has weakened for three years while global reserve currencies such as the euro and the yen have strengthened. This has allowed them to benefit from greater exposure to non-dollar-denominated assets, mitigating risks arising from local currency volatility and taking advantage of foreign exchange opportunities. Maintaining a well-diversified portfolio across regions, sectors, and asset classes remains crucial to effectively manage risks and capitalize on global opportunities in a market that is increasingly stable but also more segmented,” Lopez says.
As a result, clients have adopted a diversified approach to mitigate market volatility and have leaned toward defensive strategies in search of stability, including investments in less volatile sectors such as Consumer Staples and Utilities, which offer stable returns. “We have seen the implementation of high-dividend equity strategies in uncertain markets and international diversification, especially in developed and emerging markets, which posted strong returns in 2025. Positioning is leaning toward taking advantage of corrections as buying opportunities, following the bullish projection for the S&P 500 in 2026,” she notes.
Compared with other years, Lopez has detected significant changes in asset allocation. In particular, she observes a greater emphasis on international equities and stronger demand for mixed fixed income. “The entry of the MSCI EAFE and Japan’s TOPIX into bull markets has led investors to increase global exposure to capture the superior returns recorded in 2025. Meanwhile, in fixed income, despite the mixed performance of the domestic bond market, high-grade investment assets continue to attract interest due to their currently competitive yields,” she says. She also acknowledges an increase in the weight of metals and commodities, as well as an adjustment in positions in technology.
EM, ETFs, and Alternatives
So far, Lopez has explained how investors have been feeling and how they have moved their portfolios, but her analysis goes a step further. She explains that diversification in developed markets such as Japan and in emerging markets continues to be a priority for investors due to the strong projected gains. “The growing need to mitigate concentrated risks has also led to greater adoption of strategies that include exposure to foreign currencies such as the euro, in addition to the U.S. dollar, expanding currency hedging within portfolios.”
On the other hand, she highlights that demand for ETFs will continue to grow in 2026 thanks to their ability to provide diversified access to specific sectors and global strategies while optimizing costs. “Offshore ETFs that trade in the International Quotation System (SIC) continue to be an attractive resource for Mexican investors, as they offer unique tax advantages and allow exposure to foreign currencies such as the euro (EUR) and the yen (JPY), along with USD, expanding flexibility and return potential in diversified portfolios,” she notes.
Beyond these trends, the expert from Excelsis Global Private Wealth makes it clear that the renewed interest in alternative assets as a source of diversification and protection against volatility has not been a one-off phenomenon. According to her, the most prominent assets and strategies are private credit, infrastructure, and hedge funds.
Filtering the Noise
Beyond asset allocation, what role are financial advisors playing? According to the team at Klosters, advisors have gained weight as “translators of noise.” “The market speaks in a language of algorithms and alarmist headlines, and our job is to translate that into our clients’ objectives. We don’t just report returns. We focus our support on managing expectations. In an overinformed world, our value is saying ‘this is 24-hour noise’ vs. ‘this is a structural change that affects your wealth,’” they explain.
Fernando de Frutos, CIO of Boreal Capital Management, goes a step further and notes that rather than “translators,” advisors have become a “filter” in the face of unlimited access to information and investor saturation. “The challenge is no longer accessing data, but distinguishing signal from noise,” Frutos says. When acting as a “filter,” he starts from the premise that the current geopolitical situation is more volatile than it was 10 or 20 years ago, but not necessarily more than it was 40 or 50 years ago during the Cold War—or even a century ago. “Many comparisons are made with the so-called ‘Pax Americana,’ which reached its peak in the 1990s after the fall of the Berlin Wall, when China was just beginning its economic and military rise. It is worth keeping perspective: that period was probably a historical exception, not the norm,” Frutos recalls.
It is nothing new that advisors have gone through different market events and shocks, but as pointed out by Grey Capital, what matters is putting what has been learned at the service of investors. “The lesson has been consistent: the wealth portfolios that navigate change best are not those that react the fastest, but those that are best structured and governed. In complex contexts, discipline and perspective are more valuable than speed. Every crisis teaches the same thing: those who have structure can wait; those who don’t are forced to react, and that is a major risk,” says Catherine Ruz Parada, partner at Grey Capital Latam.
