The “Inverted Pyramid”: Beneficiaries of the New U.S. Dietary Guidelines

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Pixabay CC0 Public DomainAuthor: JerzyGórecki, Pixabay

U.S. government measures aimed at changing the country’s eating patterns provide a significant boost to companies that form part of the supply chains of so-called “real food” and those engaged in product reformulation. The new guidelines emphasize protein, dairy products and quality fats, tighten the nutritional criteria to be applied in schools and change the conditions for the use of food assistance benefits.¹

This measure marks a major shift in the direction of nutrition policy. By prioritizing “real food” in its new dietary guidelines, the government makes clear its intention to redirect the national diet toward alternatives to ultra-processed foods, favoring unprocessed or minimally processed, nutrient-dense foods.

This policy shift has far-reaching implications for investors, as in practice the government is seeking to steer both consumer behavior and the billions of dollars allocated to institutional food purchasing.

In our view, as institutions and consumers adapt to these new nutritional criteria, companies that already have capabilities in “real food” supply chains and product reformulation technologies could benefit disproportionately from the new regulation.

A Radical Shift from the Nutrition Policy of Recent Decades

To fully understand the scale of this change, it is necessary to go back to the original food pyramid published by the U.S. Department of Agriculture in 1992.

Those guidelines prioritized refined carbohydrates over nutrient-rich proteins and healthy fats. They were based on a daily intake of between six and eleven servings from the grain group, such as bread, rice and pasta. Fats and oils were relegated to very moderate consumption.

The 2025–2030 U.S. guidelines mark an almost complete reversal of this trend. In the new “inverted pyramid” framework, foods from the grain group have been moved to the bottom, while quality proteins, whole dairy products and healthy fats take center stage in a balanced diet.

This shift falls within a broader mandate from Health Secretary Robert F. Kennedy Jr. for Americans to “eat real food.”² Among the most significant aspects of the new policy are the following:

  • The new guidelines recommend a daily intake of between 1.2 and 1.6 grams of protein per kilogram of body weight.
  • The government has declared “war on added sugar,” replacing the vague recommendation of “10% of total daily calories” with a strict limit of no more than 10 grams of added sugar per meal. In addition, it states that added sugar is not part of a healthy diet for children under four years old.
  • The new guidelines endorse fat sources from unprocessed or minimally processed foods, such as whole dairy products, eggs and red meat, as essential components of a nutrient-rich diet.

The Scope of the New Guidelines

Although consumption trends often take years to change, the impact of the new guidelines will be felt immediately due to nutrition policy. The guidelines are not mere recommendations: they constitute a mandatory framework that determines how billions of dollars in public food spending must be allocated.

Before ultimately influencing broader U.S. market standards, the most significant ramifications of the new guidelines are likely to be seen directly in two key areas:

  • School nutrition: the guidelines determine the menus of around 30 million students. Currently, ultra-processed foods account for nearly two thirds of caloric intake among those under 18. We anticipate a revision of federal school meal standards that prioritizes quality protein and whole dairy products and sets strict limits on added sugars.
  • Public assistance: the Supplemental Nutrition Assistance Program currently serves 42 million low-income Americans, 78% of whom also receive healthcare coverage through Medicaid. The government therefore has a clear financial incentive to change the conditions governing the use of food assistance benefits to prevent them from being spent on unhealthy products associated with obesity and other health problems.

The United States accounts for nearly 30% of global food spending, so this policy shift could have a significant impact on investment opportunities in the global food sector.

This does not mean that the new guidelines reflect global scientific consensus on healthy eating. In fact, the inclusion of certain elements, such as the recommendation to consume red meat and animal fats, mostly saturated, is highly controversial. Nevertheless, we believe they could accelerate the transition toward healthier, more nutrient-rich diets that is already underway.

Structural Beneficiaries of the Shift Toward “Real Food”

In our view, the new guidelines enhance investment opportunities in five specific areas:

  • Quality protein. We believe that the notable increase in recommended protein intake will benefit high-quality aquaculture and dairy producers, which also aligns with growing health and wellness awareness and the increasing penetration of GLP-1 weight-loss drugs. In our view, leading farmed salmon producers are well positioned, as the new guidelines explicitly endorse the consumption of omega-3-rich fish.
  • Fresh produce. The new pyramid prioritizes fruit and vegetables, which could favor market-leading producers in this segment.
  • Herbs and spices. The new guidelines encourage Americans to reduce sodium and added sugar consumption, meaning herbs and spices could become valuable allies in adding flavor to “real food.” Spice and seasoning companies may benefit.
  • Fermented foods and gut health. For the first time, U.S. federal guidelines explicitly endorse the consumption of fermented foods such as kefir, sauerkraut and miso. We believe leaders in the yogurt sector and in specialized starter cultures and enzymes are well positioned to benefit from this focus on microbiome health.
  • Reformulation. Food manufacturers face the difficult task of removing added sugars from existing products. To address the technical challenge of complying with the new, stricter limits while maintaining taste, many manufacturers are partnering with specialized ingredient suppliers and food reformulation companies.

A New Direction for U.S. Food Policy

The new guidelines from the U.S. Department of Agriculture signal a new direction for the U.S. food market. Given their potential to reshape the allocation of food spending in the country, these changes are not insignificant for the global food sector, nor for those who invest in it.

By prioritizing minimally processed foods and tightening nutritional criteria in a market currently dominated by ultra-processed products, we believe the new guidelines could strongly favor leading providers of products and services that enable healthier diets.

iShares, Vanguard and Invesco: the Leading U.S. Trio in the UCITS ETF Business

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iShares, Amundi, Vanguard, Invesco, and Xtrackers outpaced their rival ETF issuers in 2025 thanks to strong asset-gathering momentum and new launch activity, according to the new ranking published by ETF Stream. The study, titled ETF Issuer Power Rankings 2025, concluded that the trio of U.S. asset managers recorded significant relative progress compared with their competitors in the European listed ETF market.

The report reached this conclusion based on its own methodology, which evaluates five metrics over a 12-month period: flows (absolute and relative in 2025); trading (cumulative volume and volume relative to the number of ETPs); revenues (absolute fee income and revenue relative to the number of ETPs); activity (number of ETP and strategy launches); and presence (absolute flows by product class).

According to the report, the world’s largest asset manager, BlackRock, tops this issuer ranking for the first time after not only surpassing its own results from previous years, but also recording in 2025 more net inflows and higher trading volume in its European ETF business than its next four competitors combined.

To highlight some of the figures that explain its leadership, iShares recorded net inflows of $92.8 billion in equities and $36.1 billion in fixed income, comfortably more than double those of its closest competitor and around 40% higher than the amounts it posted in each category last year. “Its leadership extended across most segments, with particularly wide gaps in ESG, emerging markets and commodities, where it added $26 billion, $12.1 billion and $7.7 billion in net new assets, respectively,” the report notes.

It also left virtually no front uncovered, with 36 new launches spanning from active core building blocks to collateralized loan obligations (CLOs) and corporate crossovers, quantum computing and AI themes, new ways of weighting U.S. and global equities, and its long-anticipated entry into cryptoasset exchange-traded products (ETPs).

The New York-based manager’s cumulative trading volume in 2025, at $1.84 trillion, marked a notable increase from $1.47 trillion the previous year and was more than three times that of the next most liquid issuer. “It remains to be seen whether its 2026 initiatives in more active launches and more targeted exposures can maintain the same growth pace on an already colossal scale,” the report states.

From second to fifth place

Following iShares’ lead is the European firm Amundi. Europe’s largest asset manager climbed the ranking again after adopting an offensive strategy in low-cost core products and in its retail offering, while also outlining a plan to establish a meaningful presence in the European active ETF and white-label segments. “The launch of its low-fee core range and the expansion of its well-established synthetic replication platform supported $33.9 billion in equity ETF inflows, alongside demand for its well-positioned country-sector strategies, including its European banks product. The firm also recorded $16.9 billion in fixed income strategies, led by strong investment in exposures such as short-duration euro corporate debt,” the report states.

Looking ahead to this year, a shift in focus will see the firm join players such as State Street and DWS in supporting third parties entering the market by offering capital markets support, alongside plans to develop its own in-house active ETF range and a more granular fixed income offering.

Notably, after Amundi, third and fourth place in the ranking are once again occupied by U.S. firms: Vanguard and Invesco. According to the report, Vanguard, founded by Jack Bogle, reached the podium for the first time after ending a three-year drought without launching European ETFs, undertaking ambitious retail distribution initiatives and cutting fees on its core offerings. The Pennsylvania-based manager recorded significant net inflows, attracting $31.7 billion in new money during 2025—the third-highest figure among all issuers—despite ending the year with a limited range of just 40 products.

For its part, Invesco broke into the top five after posting the second-largest inflows in the smart beta and commodities segments, which, together with market performance, drove 44.6% growth in assets under management in its European ETP business.

Rounding out the top five is another European firm: Xtrackers by DWS. “The firm showed strong traction, with the fourth-largest inflows and the third-highest cumulative trading volume, reaching $472.3 billion. However, outflows in certain segments meant that its solid $31 billion in net new assets were less impressive in relative terms compared with the $39 billion in inflows that its European Xtrackers business had gathered the previous year,” the report notes. Like Amundi, the German manager benefited from partnerships with third parties. Specifically, it launched an ETF of ETFs in collaboration with Zurich Insurance and two active equity ETFs based on AI together with DJE Kapital.

Industry trends of the year

“While core indexed exposures continue to account for the bulk of scale in European ETFs, the past year has been characterized by issuers racing to lead the market in active ETF launches, retail distribution and third-party ETF-as-a-service offerings,” explains Jamie Gordon, editor of ETF Stream.

According to the report, other leading ETF providers in Europe made notable strides in asset gathering and strategic initiatives, ranging from new partnerships with neobrokers to capitalize on the growing weight of retail investors to launching full ranges of active ETFs for the first time. “Many even began to ‘rent out’ their capabilities to allow new managers to enter the format for the first time,” they add.

It also notes that competition in the nascent European active ETF segment is intensifying, with new entrants gradually eroding the dominance of market leader J.P. Morgan Asset Management. Nordea and Robeco, which narrowly missed inclusion in this year’s ranking, both ranked among the top 25 issuers by net new asset inflows in their new ETF businesses.

Looking ahead, future-oriented themes experienced a revival driven by defense after two years of net outflows, enabling specialists such as VanEck, WisdomTree and Global X to improve their position compared with last year’s ranking.

In light of these findings, Pawel Janus, co-founder and head of analytics at ETFbook, believes that European ETFs continue to show strong structural growth, reflected not only in rising assets under management but also in accelerating product innovation and an increasingly broad issuer landscape. “The market’s competitive dynamics are evolving rapidly, especially with the expansion of active ETFs and increasingly specialized strategies. In this environment, scale alone is no longer enough. Issuers must differentiate themselves through innovation, distribution strength and operational excellence,” Janus concludes.

Marlen López: “Business Consolidation Is Reflected in the Rise of Independent Models and RIAs”

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independent models and RIAs
Photo courtesyMarlen Lopez, Senior Wealth Advisor and Founding Partner of Excelsis Global Private Wealth.

The vision of Marlen López, Senior Wealth Advisor and Founding Partner of Excelsis Global Private Wealth, on the offshore U.S. advisory industry has been shaped by her experience at major firms, her entrepreneurial journey, and her ability to interpret the trends that have defined this business.

López began her career at JPMorgan Chase, where she learned how to build strong, lasting client relationships, developing a skill that would become the backbone of her professional path. However, it was during the Great Recession, when she transitioned into a new role as a financial advisor, that her career reached a turning point.

“My transition to Merrill Lynch during this period of intense market instability represented a transformative challenge. I took on the responsibility of supporting families and high-net-worth clients as they navigated economic uncertainty, refining my ability to design resilient wealth strategies and build deep, trust-based relationships,” López recalls.

The Courage to Be Entrepreneurial

Although she later continued her professional development at firms such as Wells Fargo Advisors, it was not until 2021 that, together with four other independent global wealth management teams, López brought her project, The Lopez Private Wealth Group, into the creation of Excelsis Global Private Wealth, in partnership with Sanctuary Wealth.

“The relationship I had cultivated with the founders of Sanctuary Wealth during my time at Merrill Lynch was key to this transition. Their confidence in our mission and vision allowed us to collaborate in developing an independent, boutique model designed to exceed the expectations of our high-net-worth clients. Sanctuary Wealth not only shares our philosophy, but also provides a comprehensive platform that includes products, technological innovation, and operational support, allowing us to focus on delivering truly personalized, world-class service,” she explains.

Regarding her business decisions, López’s assessment is clear: “The Lopez Private Wealth Group represents the commitment to excellence that has always guided me. Our mission is to deliver top-tier financial expertise, personalized service, and innovative strategies that create value at every stage of life and across every generation of the families we serve.”

An Environment of Consolidation

That mission remains unchanged, even within a business landscape marked by strong consolidation, increasing sophistication, and a redefinition of the advisory model. In her view, these three dynamics are unfolding simultaneously and intertwining to shape a new era in the wealth management industry.

“Consolidation is reflected in the rise of independent models and RIAs, which offer advisors greater autonomy and competitiveness. More advisors are migrating toward models that allow them to operate with greater independence and control over their practices, whether by partnering with platforms like Sanctuary Wealth, which offer flexibility without sacrificing access to high-level tools, or by building their own models from the ground up,” she states.

For López, sophistication is evident in the growing demand for comprehensive, highly personalized services similar to those of family offices—once reserved exclusively for the ultra-wealthy and now extending to a broader client base. “Finally, the redefinition is being driven by demographic, technological, and cultural shifts, such as the generational transfer of wealth, which requires advisors to adapt to new expectations around personalization, advanced technology, and human connection in order to retain key assets,” she adds.

Industry Trends

Over the years, she has observed a significant shift in the profile of offshore clients, driven by a combination of geopolitical uncertainty and generational change. “One of the most notable trends we see is the increasing sophistication of clients, with a clear focus on multigenerational wealth planning. This evolution is largely due to geopolitical instability in many of the countries we serve, which has heightened demand for expert guidance to navigate the uncertainties clients face daily, not only in their home countries, but globally,” she explains.

At the same time, she notes that as these challenges have intensified, so too has the need for robust portfolio strategies that provide clients with a sense of security and peace of mind. “In times of uncertainty, clients are highly focused on protecting their wealth and ensuring the long-term financial stability of their families. They rely on us as trusted advisors to help them build and safeguard their wealth in ways that address not only what is within their control, but also mitigate risks arising from external factors beyond their reach.”

Another significant shift has been the emergence of a younger, more technologically savvy generation stepping into leadership roles within the families they serve. “The evolving profile of offshore clients reflects a combination of global uncertainties and generational transformation. This has amplified the need for knowledgeable and adaptable expert teams capable of guiding clients through these complexities,” she affirms.

Within this broader industry transformation, the strength of the client relationship remains a cornerstone of successful business practices, particularly in the offshore market. In López’s view, trust, transparency, and ongoing education are critical components in building and sustaining that bond.

“While platforms and technology can enhance efficiency, streamline processes, and provide valuable insights, human connection and the ability to genuinely understand and address a client’s needs are irreplaceable. These relationships are cultivated through consistent communication, delivering on commitments, and honesty, qualities that foster loyalty and long-term partnerships. It is the fusion of people-centered values with platform-driven capabilities that creates a dynamic and impactful client experience,” she emphasizes.

Looking Ahead

When asked what she expects from the industry in the coming years, her message is clear: wealth management will undergo significant evolution driven by personalization, technology, and shifting client expectations. “Clients, regardless of their wealth level, demand highly personalized services similar to those offered to ultra-high-net-worth (UHNW) individuals. Advanced technology, including AI, predictive analytics, and digital platforms, will streamline operations, but human connection and ‘white-glove’ service will remain irreplaceable,” she argues.

As she notes, a key development, highlighted by Adam Malamed, CEO of Sanctuary Wealth, is the democratization of the family office experience: “Firms will expand access to high-level holistic services, such as multigenerational planning, family governance, and financial advisory, making them available to a broader range of clients.”

She also underscores that significant intergenerational wealth transfers highlight the need to connect deeply with future wealth holders, aligning services with their values, such as interest in ESG investing. In this context, she maintains that firms that cultivate a strong cultural identity and entrepreneurial flexibility will attract both advisors and clients, ensuring resilience and growth in a competitive environment. “To thrive, firms must embrace innovation while prioritizing relationship-building, constantly evolving to meet client needs. Those that fail to adapt risk losing relevance in this transformative era,” López insists.

Her main conclusion regarding the offshore business is that “while it faces challenges such as geopolitical uncertainty stemming from trade tensions, changes in immigration policies, and perceptions of protectionist measures by the United States toward Latin America; as well as strict regulation (KYC/AML) requiring longer and more complex processes to ensure global compliance and combat illicit activity; and tax complexities related to withholding taxes, succession laws, and legal structures that may be confusing for foreign investors—it remains highly attractive to Latin American investors seeking refuge, diversification, and growth in a stable, secure environment with access to liquid markets and unique opportunities.”

She emphasizes that “to capitalize on these opportunities, clients and advisors must adapt to changing conditions, prioritizing transparency, regulatory compliance, and delivering an innovative, highly personalized approach that responds to modern market demands.”

Trump’s Turn Toward Power Politics and the European Defense Sector’s Role

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Statements and executive orders issued by U.S. President Donald Trump since the start of his term are having a direct negative impact on major U.S. defense companies, while, by comparison, European firms appear relatively better positioned.

According to WisdomTree, the measures promoted by the White House directly affect capital allocation and margins at leading U.S. military contractors, weighing on their share prices relative to their European peers. In Europe’s case, however, the effect is not so much an immediate boost as a relative advantage. Investors are increasingly valuing European companies more positively due to their lower governance risk and greater flexibility in returning capital to shareholders.

What Trump Has Done:

Trump has announced a temporary ban on dividend payments and share buybacks for U.S. defense companies until weapons production accelerates. He has also publicly criticized what he considers excessive executive compensation and has demanded new investments in industrial facilities. The president justifies these decisions by pointing to delays in the manufacturing, deployment, and maintenance of military equipment, and has warned that he is prepared to reshape how the military-industrial complex operates.

This new policy direction prioritizes increased production capacity, speed, and manufacturing volume over shareholder remuneration. As a result, cash flow visibility could decline and valuations of major U.S. defense companies could come under pressure.

Although demand for military equipment remains strong, the government’s confrontational tone toward management teams increases regulatory and governance risk in the United States, an element that, by comparison, enhances the appeal of European defense companies.

Trump Proposes a Record $1.5 Trillion Military Budget in 2027 and Reinforces the Position of European Defense

President Donald Trump has called for a U.S. military budget of $1.5 trillion in 2027, significantly higher than the $901 billion approved by Congress for 2026. While this has supported defense sector stocks, it has also generated skepticism among budget experts. Trump’s request for a record budget reinforces the view that the world is moving toward a more militarized, hard-power equilibrium, indirectly strengthening the bullish case for European defense, even as his capital allocation controls specifically target large U.S. contractors. At a macro level, it is further confirmation that the notion of a “peace dividend” has come to an end.

The proposal follows immediately after the operation in Venezuela and comes alongside threats to redirect procurement away from contractors that continue share buybacks instead of investing in factories, equipment, and capacity.

On one hand, a much larger U.S. budget is clearly positive for global defense demand, supply chain volumes, and the perceived durability of the cycle. On the other, Trump is explicitly tying this funding to conditions: restrictions on buybacks and dividends, and pressure on what he calls “exorbitant” executive pay. This creates a more restrictive governance and capital return environment for large U.S. firms than for most of their European counterparts.

Several major European defense companies could benefit from increased U.S. spending without facing the same constraints. These include BAE Systems, with exposure to naval systems, electronics, and munitions; Fincantieri, through its U.S. shipbuilding subsidiaries; Leonardo, in helicopters and electronic systems; Rheinmetall, expanding munitions and vehicles in the United States; and Safran, with aerospace and electronic defense exposure. This positioning allows them to tap into strong U.S. demand while maintaining the capital return flexibility typical of the European market.

This announcement comes amid a tense geopolitical backdrop, with several factors reinforcing the case for higher defense budgets in Europe. Peace negotiations between Russia and Ukraine have stalled again, and recent Ukrainian advances around Kupiansk underscore that the conflict remains unresolved, with no clear dominance by either side. The persistence of these tensions supports expectations of sustained elevated budgets and order flows in the European defense sector for years to come, rather than as a temporary phenomenon.

Greenland/Arctic Flashpoint

Trump’s renewed threats and rhetoric regarding “options” around Greenland, including not ruling out the use of military force against the territory of a NATO ally, are being described as a potentially unprecedented challenge to NATO, raising the risk of confrontation within the alliance itself.

This Arctic dimension reinforces growing investment needs in surveillance, air and missile defense, naval assets, and Arctic-capable capabilities for Europe and the Nordic countries, adding yet another theater to Europe’s already crowded threat landscape.

How These Catalysts Reinforce Europe’s Defense Advantage Over the U.S.

Taken together, stalled peace efforts in Ukraine, tensions over Greenland, and the intervention in Venezuela validate Europe’s decision to secure significantly higher spending and localize critical capabilities, reinforcing the multi-trillion-dollar rearmament trajectory.

Combined with Trump’s restrictions on U.S. defense buybacks and dividends, these new catalysts further tilt the balance in favor of European contractors. They benefit from clearer capital return narratives, direct budgetary tailwinds from multiple theaters, and a growing premium on European strategic autonomy in the face of a more politically volatile U.S. security umbrella.

This material has been prepared by WisdomTree and its affiliates and is not intended to be used as a forecast, research, or investment advice, nor does it constitute a recommendation, offer, or solicitation to buy or sell securities or to adopt any investment strategy. The views expressed are as of the date of publication and may change as subsequent conditions evolve. The information and opinions contained in this material are derived from both proprietary and non-proprietary sources. As such, no guarantee of accuracy or reliability is provided, and WisdomTree, its affiliates, and their respective officers, employees, or agents accept no liability for errors or omissions (including liability to any person due to negligence). Any reliance on the information contained in this material is at the reader’s sole discretion. Past performance is not a reliable indicator of future performance.

Sovereign Rating Map: From Outlooks to Their Impact on Markets

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There is broad consensus that global economic growth will remain stable in 2026, although political uncertainty, particularly regarding the U.S., as well as geopolitical conflicts, will persist. In this context, the rating agency EthiFinance Ratings expects sovereign ratings to remain stable, especially due to continued access to markets, orderly debt management, and a monetary policy environment in the process of normalization. However, the agency warns that rating differences are becoming increasingly pronounced, driven by disparities in potential growth, political and institutional instability, and uneven fiscal trajectories.

These outlooks and reflections are relevant because, as Antonio Madera, Chief Economist at EthiFinance, notes, a rating is “that big elephant that is hard to move, but when it moves, it makes noise.” In his experience, specialized investors assign ratings the role they are meant to have, that of assessing solvency in a way that should remain stable throughout cycles and not be sensitive to them. “Unlike what happened during the sovereign debt crisis, when an acute solvency problem exacerbated by a financial crisis was signaled, in this case the perception is one of greater acceptance of ratings around the assigned levels,” he warns.

Divergences in Europe

In Europe, by country, the EthiFinance Ratings Sovereign Credit Map places Germany, the Netherlands, and the Nordic countries among those with the highest level of confidence in policy execution and fiscal preservation; while Portugal and Greece show that fiscal adjustments and structural reforms can reshape a sovereign profile; and France, Italy, and Spain face “challenging” fiscal positions, with high public debt and persistent fiscal deficits, although with differences among them.

According to his analysis, Portugal is a clear example of a country capable of moving from intervention to a balanced public finance position, a path that Greece also appears to be following, “although still with very worrying levels of public debt,” he adds.

Doubts About the U.S.?

Regarding the U.S., Madera acknowledges that Moody’s downgrade last year is not, in itself, a reason to question the country’s ability to meet its obligations in full and on time, in terms of default probability, the difference between AAA and AA is minimal, as it remains an extremely safe issuer. “Rather, it underscores that its current fiscal position, debt burden, external deficit, and institutional quality are no longer fully aligned with the level of excellence required of a AAA-rated country,” he notes.

Madera is confident that, just as he does not foresee an upgrade to the U.S. rating, he also sees no grounds for a further downgrade. However, he acknowledges a meaningful risk related to the institutional factor, an element that often goes unnoticed in developed countries but serves as the cornerstone underpinning their ratings.

“Political deadlocks over the debt ceiling, the inability to outline a clear fiscal path, and/or recurring threats to the Fed’s independence erode investor confidence and weigh on governance. Added to this is the fact that the U.S. rating rests in part on the dollar’s role as the world’s reserve currency. While I have no doubt that the dollar will continue to play that role, geopolitical volatility and concerns about the fiscal outlook have nonetheless weakened it, prompting some investors to seek safer currency alternatives across the Atlantic. In this context, the path toward fiscal consolidation becomes even more essential,” Madera explains.

Faced with a lower U.S. rating, markets tend to magnify uncertainties, although in this specific case they have already priced in the likelihood that an upgrade will not materialize in the short or medium term. “Not belonging to the group of triple-A countries excludes certain institutional investors who require that rating threshold, although the shrinking number of countries within that select club is prompting a reassessment of investment policies,” he explains.

Based on his experience, what truly concerns him is the cyclical dimension driven by geopolitical uncertainty and declining confidence. “Among other effects, it directly increases the cost of debt and, consequently, erodes the fiscal buffer, something that undoubtedly exacerbates the imbalances mentioned earlier,” he adds.

Diversity in LatAm

In Madera’s view, Latin America occupies a significant place on the complex geopolitical chessboard that has taken shape in recent years, one on which the U.S. appears keen to maintain influence, as reflected in recent developments in Venezuela and threats of broader regional spillovers. “Amid this uncertainty, we see a positive development in the historic agreement between Europe and Mercosur, which opens access to a vast potential market for both sides and is likely to support economic growth in the region. Moreover, foreign capital flows may increasingly turn toward these markets, many of which require investment, in search of alternatives to the U.S.,” he highlights.

Overall, his outlook for the region remains stable, and he does not expect these risks or opportunities to materialize in the near term. “Chile, Mexico, Peru, and Brazil will continue to exhibit the strongest solvency levels in the region. However, they will not be immune, particularly Peru and Brazil, which face elections this year, as does Colombia, to a climate of institutional fragmentation, intensified by external pressures fueling polarization. In other countries across the region with dollarized economies, the effects may be mixed, both in terms of international trade and debt dynamics,” Madera notes.

When asked about the “overlooked strong ratings” in the region, he once again points to Chile, Uruguay, and Peru. “The first two stand out for their greater governmental stability and institutional quality, with Chile also benefiting from more balanced public finances. Peru, while broadly comparable, faces greater political tensions than the other two,” he concludes.

Tariffs, Iran, and Private Credit: The Siren Calls Return to the Market

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Gifts Rule update
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Treasuries, oil, and private credit have dominated attention over the weekend, reminding investors that we are in a year marked by uncertainty, by the weight of geopolitics, and by sensitivity to liquidity, but above all by the market’s ability to digest this context.

Javier Molina, Market Analyst at eToro, believes that we are facing “a latent risk in a complacent market.” According to his view, we are at a delicate point in the cycle, although the surface of the market does not yet clearly reflect it. “When you connect the dots, labor data, gold behavior, aggregate valuations, flows, and credit, a much more complex picture begins to emerge than the dominant optimistic tone suggests. Although macro noise is beginning to accumulate, the market is not reacting with fear. Inflows into equity funds and ETFs continue, week after week. But when you look more closely, the story changes. The bulk of flows is not going aggressively into equities. It is going into credit. Into corporate fixed income, into instruments that offer returns via ‘yield’ with lower relative volatility. In other words, money is not decisively increasing its bet on beta, but rather prioritizing carry and quality,” explains Molina.

Message for the Investor

At PIMCO, they agree that markets can appear calm, even when vulnerabilities are accumulating beneath the surface. In fact, traditional volatility measures, such as the VIX and the MOVE index, may signal complacency in both equity and fixed income markets, even in situations of rising risk.

“Investors have enjoyed a bull market in equities that has lasted for years, driven largely by technology. But as AI continues to revolutionize industries and the broader economy, the stock market volatility observed in recent days, especially in technology-related sectors, demonstrates how uncertain the outlook remains,” note Marc Seidner, Chief Investment Officer of Non-Traditional Strategies at PIMCO, and Pramol Dhawan, Head of the Emerging Markets Portfolio Management Team at PIMCO.

In this context, their message to investors is clear: expect the unexpected. For both experts, 2026 requires an agile mindset prepared for uncertainty:

“Be prudent and disciplined with valuations. U.S. equity valuations still appear elevated, leaving little room for error and increasing susceptibility to sudden fluctuations. Be alert to signs of market complacency and make greater use of relative value strategies rather than directional bets. Also maintain flexibility across regions, not just sectors, with the ability to move capital decisively and find value, especially when attractive yields are available in many countries. And finally, be agile enough to react quickly when volatility creates dislocations, whether in Japanese government bonds, U.S. agency MBS, or emerging market sovereign bonds, leveraging global scale and local presence to identify opportunities.”

Trade Policy: A Blow to Trump’s Tariffs

Taking quick stock of what the past 72 hours mean for investors, the first issue to mention is that the U.S. Supreme Court ruled against the Administration by 6 votes to 3, finding that the use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs is unlawful. Consequently, President Trump expressed his disagreement with the decision, calling it “deeply disappointing” and labeling the justices who supported it as “unpatriotic.” He also announced that he would resort to all possible laws to impose a new global levy. “Overall, the decision on tariffs does not alter our positive view on financial markets. The decision is slightly favorable for equities insofar as a lower tariff rate improves household purchasing power, limits inflation concerns, and supports further rate cuts by the Fed,” says Mark Haefele, CIO of UBS Global Wealth Management.

Following the announcement, U.S. equities reacted positively to the decision: the S&P 500 rose 0.7% and the tech-heavy Nasdaq advanced 0.9% immediately after the ruling. However, as experts at Bloomberg highlight, the Supreme Court’s decision affected the U.S. bond market, valued at 30 trillion dollars, by threatening to increase the government’s budget deficit and cause further damage to an economy already grappling with elevated inflation and unemployment. The issue is that the U.S. government could face more than 175 billion dollars in claims if the ruling leads to refunds.

According to the firm’s experts, although Trump said he would approve a new 10% global tariff to replace those he has just lost, the long-term outlook remained unclear, given that the legal provisions he invoked contemplate temporary levies.

On the matter, Jack Janasiewicz, Portfolio Manager at Natixis IM Solutions, notes that with the midterm elections in November, affordability has come to the forefront, and the time required to implement alternative tariffs could allow for some price relief in the meantime.

“That said, we do not expect U.S. companies to suddenly reverse the price increases that have already been implemented. Rather, we expect companies to hold firm, allowing the decline in tariff-related costs to help bolster margins in the meantime. The bigger issue revolves around the prospects for issuing refunds, which complicates the situation and raises many more questions that need answers. Until we have greater clarity on this, we can expect the Treasury market to experience a slight bearish steepening and marginal weakness in the U.S. dollar,” argues Janasiewicz.

Geopolitics: Iran and Oil

The geopolitical situation in the Middle East remains a hot topic. Last week saw a massive redeployment of U.S. forces to the region and harsh rhetoric toward Iran. This move comes as Iran’s Supreme Leader threatens to sink U.S. warships and joint naval exercises between Russia, China, and Iran have been announced in the Strait of Hormuz. Consequently, some voices suggest that the Trump administration may be close to launching a large-scale military campaign against Iran, exceeding previous operations in scope.

“Geopolitical tensions remained elevated in January amid concerns that the West might launch possible military strikes against Iran. This news flow exerted some upward pressure on oil prices and helped reinforce the reflation narrative,” says Cristina Matti, Head of European Small & Mid Cap Equities at Amundi.

Undoubtedly, the conflict with Iran dominates the oil market, and prices are inflated with a considerable geopolitical risk premium. In the view of Norbert Rücker, Head of Economics and Next Generation Research at Julius Baer, a military confrontation seems inevitable, but such an escalation does not necessarily entail a disruption of oil supply, as recent years have repeatedly demonstrated. “More importantly, today’s oil market is very resilient on the supply side, thanks to ample storage, production exceeding consumption, and spare production capacity. While we are not certain whether the current rally will peak at 70 or 80 dollars, we are more confident that the risk premium will decline and oil prices will return below 60 dollars by midyear. Amid the current geopolitics, we maintain our neutral view,” acknowledges Rücker.

Private Credit and Liquidity

In the private markets sphere, the siren songs are led by Blue Owl, one of the largest private credit firms, which has carried out significant sales of private credit assets worth around 1.4 billion dollars as part of its response to liquidity tensions and investor redemption pressures. According to the asset manager, the assets sold consist primarily of direct lending loans originated by the firm and sold to large institutional investors such as public pension funds and insurers, but the market interpreted the episode as a sign of liquidity risk in retail-oriented products.

Analysts highlight that this event has had repercussions in the market on three fronts: the drop in Blue Owl’s share price and the temporary contagion to other similar firms such as Ares, Apollo, Blackstone, KKR, and TPG; in the BDC universe, the episode reinforced fears that, in the face of further redemptions, funds may have to sell assets or activate limits, which typically translates into discounts and weaker sentiment; and finally, it brought back to the forefront the debate about private credit’s exposure to software/IT services.

When assessing how all this will affect private credit’s outlook, Gregory Ward, Deputy Head of Global Product Management and Private Credit Chief Investment Officer, and Chris Gudmastad, Head of Private Credit at Loomis Sayles (affiliate of Natixis IM), believe that capital spending related to artificial intelligence and technology will offer attractive opportunities for the private credit market. “In our view, increased M&A activity and strategic investment in growth should also drive a more diverse set of investment opportunities. Strong investor demand should persist, fueled by the rise of investors attracted to less mature areas of private credit (e.g., ABFs) and new non-institutional sources of capital that are emerging,” they state.

Finally, they conclude by highlighting several risks to watch this year, such as “increased competition among lenders, which could lead to yield compression and more aggressive deal structures,” or “macroeconomic uncertainty, such as interest rate volatility or a slowdown in economic growth, which may expose weaker borrowers and potentially result in higher default rates.”

Update to the Gifts Rule: Amount Increased from 100 to 300 Dollars per Recipient

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In February 2026, the SEC (U.S. Securities and Exchange Commission) approved a significant amendment to the regulations of the Financial Industry Regulatory Authority (FINRA) regarding gifts and business courtesies. According to the update to the well-known Gifts Rule (Rule 3220), the annual limit on permitted gifts has been increased from 100 to 300 dollars per recipient. This is the first adjustment to this amount since 1992 and responds both to the cumulative inflationary erosion over more than three decades and to the need to adapt the rule to current practices in the financial sector.

For financial advisors and professionals who serve high-net-worth clients, the change provides greater flexibility in the area of business courtesies, without altering the guiding principle of the rule: to avoid improper incentives or conflicts of interest. “The new threshold maintains the limit per person and per year, reinforcing the logic of prudence and proportionality. In practice, the update brings economic coherence to a figure that had become outdated, while preserving the control framework designed to protect the integrity of professional relationships,” explain representatives from the U.S. authority.

Beyond the quantitative increase, the reform incorporates greater technical clarity: FINRA has codified within the rule itself criteria that had previously relied on dispersed interpretative guidance, including aspects such as the valuation of gifts, their aggregation when there are multiple recipients, and the treatment of courtesies linked to events or business activities. Likewise, “certain exclusions are defined more precisely, such as personal gifts unrelated to professional activity or certain condolence gifts, providing legal certainty to both firms and registered professionals,” the update notes.

For experts, this change is also significant because it expressly authorizes FINRA to grant exemptions in specific cases, under certain conditions. This authority introduces an additional degree of supervised flexibility, particularly relevant for entities with complex structures or an international presence. At the same time, the SEC emphasizes that the update does not reduce expectations regarding internal supervision: firms must maintain systems and procedures reasonably designed to ensure effective compliance with the rule.

Kuwait and Papua New Guinea Added to the List of High-Risk Countries in the Prevention of Money Laundering and Terrorist Financing

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The Financial Action Task Force (FATF or GAFI by its English acronym) has updated the list of high-risk jurisdictions for presenting serious deficiencies in systems for the prevention of money laundering and terrorist financing.

Following this update, and compared to the previous list published in October 2025, the FATF has included two countries, Kuwait and Papua New Guinea, which must improve their prevention systems, and has not removed any from the previous list. “The Financial Action Task Force periodically updates this list to encourage the countries or jurisdictions included to apply additional measures to protect the international financial system from risks related to money laundering and terrorist financing,” recall the experts at finReg360.

Therefore, the list, updated as of February 2026, of countries and territories at high risk for presenting strategic deficiencies in this matter is as follows:

  • Angola
  • Algeria
  • Bolivia
  • Bulgaria
  • Burma / Myanmar
  • Cameroon
  • North Korea
  • Ivory Coast
  • Haiti
  • British Virgin Islands
  • Iran
  • Kenya
  • Kuwait
  • Laos
  • Lebanon
  • Monaco
  • Namibia
  • Nepal
  • Papua New Guinea
  • Democratic Republic of the Congo
  • Syria
  • South Sudan
  • Venezuela
  • Vietnam
  • Yemen

This Is the Geographic, Sector, and Style Rotation of Portfolios Worldwide

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Bank of America’s February global fund manager survey confirms the rotation in asset allocation from the U.S. toward Europe and emerging markets. Looking at the absolute positioning of FMS investors (% net overweight), it is observed that, this month, investors are more overweight in equities, emerging markets, and the eurozone, and more underweight in bonds, the U.S. dollar, and the U.S.

Compared with history, that is, the past 20 years, investors are overweight the euro, commodities, and bank stocks, and underweight the U.S. dollar, cash, and REITs. In fact, investors’ overweight position in emerging market equities has risen to a net 49%, the highest level since February 2021. In addition, for the first time in 10 months, a majority of managers believe that small caps will outperform large caps (net 18%).

Another significant data point, which also shows a certain sector rotation, is that investors increased allocations to energy, materials, and consumer staples, while allocations to technology in U.S. equities and to the U.S. dollar were reduced. We may also be facing a change in perception regarding which investment style could perform better in the current context. “A net 43% expect value stocks to outperform growth over the next 12 months, the highest reading since April 2025,” the survey indicates.

Looking for further developments in asset allocation, the February survey also shows that the combined allocation to equities and commodities stands at a net 76%, the highest level since January 2022. “Historically, FMS allocation to equities and commodities (risk assets) has been correlated with the ISM manufacturing PMI. However, recently the two have diverged significantly, as manufacturing PMIs have lagged,” BofA explains. Finally, the survey highlights another shift, this time in currencies: “A net 23% is overweight the euro, a historic high since October 2004. In fact, FMS investors have been consistently overweight the euro since July 2024.”

A Look at Sectors and Market Capitalization

Investment firms had already detected this rotation, which we first clearly saw in the second half of 2025. In the opinion of Nenad Dinic, Equity Strategy Analyst at Julius Baer, the recent style and sector rotations show that the market is broadening beyond the concentration in mega-cap technology. “We view these ongoing rotations as a healthy development and expect them to continue in the short term,” notes Dinic.

For this expert, after three years in which U.S. mega-cap technology stocks drove most of the gains in the global market, equity markets are now experiencing a notable and healthy rotation. “We see these rotation developments as constructive and timely. Concentration risk is declining as crowded positions in the large U.S. technology complex are unwound, creating room for greater diversification. European equities stand out with expected earnings growth of around 8% and greater fiscal support, especially in cyclical and value-oriented segments. At the same time, maintaining an allocation to high-quality defensive exposures can provide stability. Asian markets, including Japan, India, and China, are also benefiting from a renewed capital rotation, while global emerging market equities are strongly supported by solid upward earnings revisions and the tailwind of an expected Fed easing,” he argues.

From Edmond de Rothschild AM, they believe that the main victim of this sector rotation is technology, and particularly software. “Concerns about the enormous investment needs in AI increased during the week and triggered sharp declines in U.S. technology giants, even among those that reported good results. In addition, improvements in the new Anthropic model, with its impressive capabilities in computer code generation, fueled fears about software companies’ ability to compete. As a result, the sector continued to lose ground and has already accumulated a drop of nearly 30% from the peak reached last October. The correction was especially severe in market segments exposed to retail investors, who are suffering significant losses—including those stemming from the massive sell-off in crypto assets—and are now forced to unwind positions across all risk asset classes,” they explain.

Anthony Willis, Senior Economist at Columbia Threadneedle Investments, believes it is too early to say how far this rotation will go, but acknowledges that we are witnessing changes in sentiment regarding how AI will evolve. “We are in an early phase of adoption and at the beginning of a long-term trend. Over time, greater clarity will emerge, but for now investors are being somewhat more cautious with respect to large technology companies. One positive aspect of the recent difficulties in the technology sector is that other sectors that had gone unnoticed are receiving greater attention. We have seen small caps, value stocks, and other regions demonstrate better performance, including Japan, Asia, and Latin America,” notes Willis.

Direction: Cyclical and Old Economy Stocks

For his part, Steve Chiavarone, Deputy CIO of Global Equities at Federated Hermes, agrees with this style rotation reflected in the latest Bank of America survey. According to his analysis, the market is moving in a more cyclical direction: “Cyclical value companies and old economy names are starting to respond and participate more. And given the volatility we have seen so far this year, defensive dividend-paying names are also starting to respond and, in many cases, lead.”

For Chiavarone, this broadening is something market participants have been waiting for over the past two years, and it is now clearly visible in large dividend-paying companies, which are also participating and, in many cases, leading. “This broadening is something market participants have been waiting for over the past two years, and we are now clearly seeing it in large-cap value, on both the cyclical and defensive sides. At the same time, small caps are beginning to outperform for the first time in several years,” he argues.

Not Very Sexy, but Established: The Quiet Green Bond Market

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Sustainable investment has gone from enjoying great popularity to becoming a minor issue in global portfolios. However, the growth of sustainable assets has not been relegated to the “background.” This is the case with bonds labeled as sustainable. In fact, in 2025 it was confirmed that the labeled debt market is consolidating: issuance closed the year at around 6% above 2024.

According to Mirova in its latest report, adjusting for issuances by U.S. agencies, whose labeled debt issuance has surged over the past two years, volumes stood at around 1,170,000 million dollars. “The momentum that began in 2023 continued throughout 2024 and was maintained in 2025. The market is largely dominated by sustainable and green formats, while other formats have lost weight; they now represent 80% of the market, compared to 70% in 2021. However, although the transition bonds launched by Japan in 2024 struggled to gain traction in 2025, there is a possibility that they may gain renewed momentum in 2026. The ICMA framework published in October (B(ey)ond Green – October 2025) provides official guidelines for issuers and investors, thereby reducing the risk of greenwashing,” it notes as the main trends.

In the opinion of Johann Plé, of BNP Paribas AM, one of the most notable milestones of this asset class is its shift toward a more mature market, in which issuance levels are settling into a more predictable range. “This universe has moved from being a niche to becoming a consolidated offering. Ultimately, green bonds are firmly positioned as the backbone of the sustainable bond investment universe. In 2025 they continued to be the main driver of GSS growth (approximately 61% of total GSS issuance) and the primary source of new issuers, underscoring their central role in market expansion,” he notes.

In fact, he highlights that last year corporates once again were a major driver of issuance, accounting for 55% of total volume (compared to 51% in 2024). “This greater contribution from corporates not only reflects significant investments in renewable energy and energy efficiency, but also the credibility of the instrument, since most issuers are repeat issuers—that is, they issue more than one green bond,” adds Plé.

Main Trends

Mirova’s report highlights that Europe is showing signs of maturity, with significant penetration of sustainable bonds in certain sectors, while Asia-Pacific is consolidating its position as the fastest-growing region. At the same time, a reduction in the relative weight of the American continent is being observed. One of the most striking data points is the “greenium,” that is, the yield difference between a sustainable bond and a comparable conventional one. In this case, the document notes that it remains limited, “which may reduce the incentive for some issuers, especially in a context of potential scarcity of eligible assets,” it acknowledges in its conclusions.

In the opinion of Agathe Foussard and Lucie Vannoye, fund managers at Mirova (Natixis IM), its growth is likely to be in line with that of the conventional bond market, at around 10%, reflecting a broadly stable penetration rate. “The market should receive a boost from outstanding labeled bonds that are set to mature and require refinancing, as well as from a recovery effect in the utilities sector. On the other hand, the use of sustainable formats could be slowed by strong greenium compression and the risk of a shortage of eligible assets,” they explain.

By contrast, the report detected an unexpected slowdown in the issuance of sustainable sovereign bonds in 2025. Despite this, Europe continues to lead this segment, with several countries accounting for a significant portion of the market, in contrast to the weight of the United States in the traditional sovereign market and its limited presence in the labeled sovereign bond market. According to the report, there is no doubt that these sustainable bonds remain a public financing tool.

Catalysts for 2026

Looking ahead to this year, the BNP Paribas AM expert believes there are factors that should continue to support optimism around this asset class. “One is technical, due to the maturities expected in the coming years: the proportion of green bonds maturing is expected to increase by 30% in 2026 compared to 2025, reaching approximately 170,000 million dollars. These maturities will mainly come from banks and quasi-sovereign issuances and should support the market going forward, although there is no guarantee that all of these maturities will be refinanced through green bonds,” he notes as the main factor.

In addition, he adds that strong investments in renewable energy, grids, and green buildings should continue. Although themes such as climate adaptation and water (blue bonds) are emerging trends that are likely to attract greater interest, allocation will grow slowly in the short term partly due to structural factors. “In this context, 2026 could see a refocusing of the green bond market toward ‘historical’ issuers, more naturally aligned, with a higher proportion of readily accessible eligible assets, reflecting where investments and refinancing needs are actually occurring. Other issuers may choose to exit. A rebound in the APAC region could also be expected, as taxonomy updates over the past year may boost issuance,” states Plé.

Ultimately, Plé believes that, with a size roughly similar to that of the euro investment-grade credit market, investors should expect issuance to stabilize and to be more influenced by technical factors and investment schemes. “Overall, we would expect green bonds to remain the main driver of issuance growth, still dominated by European issuers and, more broadly, by euro-denominated issuances,” he concludes.

The U.S. Challenge

Beyond dramatic headlines predicting the slow death of this asset class, Mitch Reznick, global head of sustainable fixed income at Federated Hermes, believes there are factors that show it as an evolving and indelible part of the capital markets. “Starting with the labeled bond market, figures suggest that primary issuance in sustainable bond markets in 2025 may have reached 1.2 trillion dollars, representing a slight increase compared to 2024. What makes this figure particularly striking is that the number of labeled corporate bonds issued outside the U.S. has fallen by nearly 40%. However, in recent years there has been a notable boom in the U.S. in labeled social securitized bonds, which has remained strong well into 2025,” notes Reznick.

According to the expert, the state of Texas turns out to be one of the U.S. states—if not the leading one—that invests the most in and adopts renewable energy. For example, in 2024, renewable sources in Texas generated more than 166 GWh of energy, even ahead of California. In his view, this trend could continue after several legislative initiatives against renewables failed to pass this year. “California, along with Texas and a handful of southern states, continues to top the rankings in renewable energy investment,” he adds.

Finally, from a regulatory standpoint, the U.S. is reducing sustainability disclosure requirements, while Europe appears to be losing momentum in this area. “Meanwhile, the rest of the world is moving forward. In Asia, India, the United Kingdom, and Australia, the focus is on including ‘transition’ activities in disclosures and taxonomies. This inclusion makes a great deal of sense. If the global economy is to pivot in a way that generates economic value sustainably, a successful transition is essential,” concludes Reznick.