The world’s 300 largest pension funds reached a record $27.7 trillion in assets under management at the end of 2025, representing a 13.4% growth compared to the previous year and the largest annual increase recorded since 2017, according to the Global Top 300 Pension Funds report prepared by WTW’s Thinking Ahead Institute in collaboration with Pensions & Investments.
According to the report, the increase was particularly significant among the largest funds. “The 20 largest expanded their assets by 14.7%—above the average—reaching $11.9 trillion and now accounting for 42.8% of the assets managed by the world’s 300 largest funds,” they explain. Growth was uneven across different regions. North America remains the largest region in the Top 300, although it lost market share, holding 44.7% of assets in 2025 compared to 47.2% the previous year. However, over the past five years, it registered the highest annualized growth among the major regions at 6.4%.
In Europe, assets managed by the world’s major funds increased their share to 24.6%, highlighted by Norway’s sovereign wealth fund, which surpassed $2 trillion for the first time and consolidated its position as the world’s largest pension fund—12.7% ahead of the second-largest. The United Kingdom and the Netherlands were the only markets to record negative asset growth over the last five years, both in local currency and U.S. dollars, though they remain the two largest pension markets in Europe, with mature systems and a significant presence of defined benefit plans. Europe also continues to hold the lowest proportion of defined contribution assets at 13.2%, compared to 30.7% in Asia-Pacific and 31.6% in North America.
Notably, Asia-Pacific saw its share of assets rise to 26.6%. The region maintains high exposure to equities at 51.4% of its assets—the highest percentage among the primary regions—compared to 36.4% allocated to fixed income and 10.5% to alternative assets. Technology, and especially artificial intelligence, is becoming increasingly relevant for pension funds. Fifty-six percent of study participants expect AI to generate significant benefits for the sector as a whole over the next five to ten years, though ambition outpaces readiness: many funds are still building the necessary processes and infrastructure to harness its full potential. Eighty-one percent identify data quality and standardization as one of the primary barriers to achieving this.
Greater Scale and New Capabilities
The pursuit of scale remains a primary trend in the sector. Major funds are not only increasing their asset volumes, but are also seeking new ways to expand capabilities through strategic alliances and collaborations. In this context, the report introduces the concept of hyperscaling—borrowed from the tech sector—to describe how organizations can leverage scale, data, capabilities, relationships, and governance systems to improve outcomes.
“Large pension funds are growing while simultaneously seeking new ways to enhance their capabilities. Scale remains key, as does the ability to combine knowledge, technology, data, and good governance to make better investment decisions and respond to an increasingly complex environment. Spain needs to continue promoting the development of solid, efficient complementary social welfare pillars that reinforce the sustainability of future retirement income,” explains Oriol Ramírez-Monsonis, Director of Investments at WTW Spain.
The global trends highlighted by the study also point to significant challenges for pension systems, such as the need to improve investment diversification, adapt management to the evolving needs of savers, and leverage new technological capabilities to enhance decision-making.
Photo courtesyPaul Lacroix, Head of Products de Ossiam (Natixis).
Before discussing investment ideas and products, Paul Lacroix, Head of Products at Ossiam (Natixis), pauses briefly to explain the benefits of quantitative strategies, through which “we avoid human biases.” Throughout our interview, he emphasizes the product innovation offered by the firm and highlights the advantages brought by being part of Natixis’ multi-boutique environment. In the current market climate, their equity portfolios favor the communications services, healthcare, consumer discretionary, and consumer staples sectors, while remaining cautious regarding technology and energy due to the elevated prices of their constituents.
What are the advantages of being a specialist in such a competitive environment?
We founded Ossiam in 2009, after the crisis. The objective was to have an asset manager focused on quantitative strategies. We create models and then follow them rigorously across our strategies. The advantage of a quantitative strategy is that it allows risk management and all liquidity tools to be implemented directly within the strategy itself, avoiding human biases that can sometimes lead to buying or selling stocks based on a portfolio manager’s opinion—which can be either positive or negative. Thanks to the work done prior to launching a product, we know precisely what type of risk we anticipate. Furthermore, we reduce human biases to a certain extent once the product is launched. So, yes, the environment is highly competitive for everyone, as well as very demanding. The majority of our assets are currently in equity products.
And what does working within Natixis’ multi-boutique structure provide you?
It is very useful for us. When we founded the firm, we decided to focus on quantitative investments and ETFs—a sector that we know is not yet as widespread in Spain as in other countries. Due to this setup, we needed a large firm to raise capital and distribute our products across different countries. Natixis helps us with global distribution. Having a specialist is very helpful for us. When we travel to Latin America, we have someone there who knows our products as well as the client, which is important, giving us a specialist worldwide.
Are you present in Latin America?
Yes, we visit sometimes. We regularly visit Peru, Chile, and Colombia, in addition to Mexico, where there are large institutional investors who buy UCITS funds, especially ETFs. It is an important country for us.
And what feedback do you receive from Latin American investors regarding UCITS products?
They appreciate the security and the regulatory framework backing them. They know exactly what to expect from a UCITS product. They are already familiar with the diversification limits, as well as the risk management. The global reputation of UCITS is very strong. For them, investing in UCITS funds represents, in a way, a safety net.
How does your flagship strategy, the Ossiam Shiller Barclays CAPE US Sector Value, operate?
It all starts with Professor Robert J. Shiller, winner of the Nobel Prize in Economics in 2013. In 2012, right before receiving the award, Shiller created an index alongside Barclays called the Shiller Barclays CAPE US Sector Value Index. Its goal was to utilize part of the research Professor Shiller conducted in the 1980s on the CAPE ratio. The CAPE is like a price-to-earnings ratio, but applied over a 10-year period instead of just one year. It allows for evaluating the valuation of a benchmark index, such as the S&P 500, but also functions at a sector level. That is what we use in the strategy. In short, it selects four U.S. sectors every month based on their valuation and momentum that are undervalued relative to their long-term average. The core idea is mean reversion, meaning that a very cheap sector will become more expensive as prices rise, and vice versa. It is a systematic strategy that repeats every month.
And which are currently the cheapest sectors?
In August, the U.S. Shiller portfolio included materials, healthcare, consumer discretionary, and consumer staples. The communications services sector was the cheapest in the U.S. market in August, so theoretically we could have included it, but we excluded it due to its weak momentum. As for the most expensive sectors, the leaders in this category were industrials and technology. We have not invested in technology since mid-2023, which turned out to be a bit premature. However, in the past we held positions in the tech sector and benefited from it for a long time, until it became too expensive for the model. We will continue to rotate across sectors over time following our systematic model. One of the main differences compared to traditional value investing is that we rely on relative valuation: we start by comparing a sector’s current valuation against its own long-term valuation, which allows us to compare different sectors against one another.
Why did you launch an ETF version?
There are several reasons. First, we launched the ETF in 2015, just over 10 years ago. This vehicle offers many advantages, including transparency and liquidity. Since it is a quantitative strategy, we did not want it to be a black box that we could alter. We wanted it to be fully quantitative, so it tracks an index, and fully transparent. This means that with the ETF, we publish the fund’s holdings daily. Thus, our clients know exactly what we are going to invest in and have complete transparency. Additionally, they have liquidity, as they can sell their ETF position even within the same day if they wish.
So is it an active ETF?
The distinction between active and passive ETFs is always a good question. Clients find it difficult to grasp. By law, if you are replicating an index—even an extremely complex one—it is a passive ETF. Regulation defines this ETF as passive because it tracks an index. However, the benchmark in question is quite different from the S&P 500. Consequently, tracking error exists: sometimes it outperforms the index, and sometimes it does not. So, in a sense, it acts like an active fund. Therefore, a gap exists between regulatory definitions (defining them as passive) and client perceptions (viewing them as somewhat more active, with the goal of beating the S&P 500).
Another of your flagship products is Serenity Ossiam. What does it consist of?
It is a strategy similar to a money market fund that aims to offer returns above money market rates without the credit and duration risks inherent in many traditional money market solutions. To achieve this, the fund uses synthetic replication and enters into total return swaps with leading banking counterparties. The fund holds a portfolio of assets, generally U.S. equities, but has no economic exposure to them, as their total return (positive or negative) is transferred daily to the investment bank via the swap. In exchange, the bank pays the fund the money market rate plus a spread. For corporations and large institutional investors, this represents a new way to generate yield on cash. Another advantage of these funds is their complete liquidity, with no entry or exit fees.
And do you plan to launch more ETFs?
Yes. We intend to launch many exchange-traded funds and mutual funds. We like to be innovative.
How have investors reacted to these types of products? Do they like ETFs in general?
At the end of the day, an ETF is still an investment fund. It is a fund where, beyond traditional investing, you can also buy or sell on an exchange. Therefore, for investors, there are only advantages. Provided there is no tax disadvantage—which we know differs slightly in Spain, though in other countries it is the same or even easier to access via online platforms. For instance, in Italy and Germany, ETFs are growing at a rapid pace. Instead of launching new investment funds, managers are issuing new ETFs.
And what is your take on the new account set to be approved in the European Union to encourage savers to become investors?
I see it as a good step in the right direction, but there remains a major need for financial education in general, depending on the country. How we manage retirement in Europe is very different from the United States. In the U.S., almost everyone has their own brokerage account, invests in equities, and understands how they work. In Europe, that is true in some countries, but not in others. Therefore, a significant need for education exists, and that role belongs not only to regulators, but also to asset managers, who must provide guidance and ensure that everyone understands the product.
Worldwide corporate dividend payouts reached a record $827.3 billion in the second quarter of 2026, marking a 7.9% increase compared to the previous year, according to the latest “Dividend Watch” report, which is part of the “Capital Group Global Equity Study.” Underlying growth, adjusted for exchange rates, extraordinary dividends, and other technical factors, was 7.5%, exceeding forecasts.
The second quarter is the peak of the global dividend season, and in 2026, dividends paid during this period surpassed the annual totals of previous years, an occurrence last seen in 2011. Growth was also broad-based: 88% of companies worldwide increased their dividends or kept them stable, with an average growth rate of 6%.
In the view of Alexandra Haggard, Head of Product for Europe and Asia-Pacific at Capital Group, global dividends accelerated in the second quarter of 2026, with solid growth across most regions and sectors, as well as strong increases from some of the world’s largest companies. “The boom in artificial intelligence is no longer just driving markets and stock prices; it is also contributing to generating record levels of cash returns for shareholders on a global scale. Active managers like Capital Group are well-positioned to identify companies across different sectors and regions that benefit from higher earnings growth, translating into record dividend payouts. In an environment of uncertainty, active management can help detect resilient companies that distribute dividends and offer investors a reliable source of income, while allowing participation in long-term corporate growth,” she explained.
Sector Trends
The fastest growth in dividend payouts occurred in the technology sector, where the underlying rate increased by 26.3% year-on-year in the second quarter. The artificial intelligence boom is driving strong earnings growth across the global semiconductor supply chain, translating into higher payouts to shareholders; half of the sector’s increase came from the global leader, based in the U.S. Technology is on track to become, for the first time, the second-largest dividend-paying sector behind financials in 2026.
The financial sector remains, for now and by a wide margin, the largest dividend payer. Dividend payouts from its entities increased by $26 billion USD (+10.1%) and were the largest contributors to the record registered in the second quarter. On the other hand, the mining recovery accelerated, helping its dividend payouts increase by 15.1%.
Regional Trends
Geographically, Japan and the broader Pacific region posted the highest dividend growth worldwide, thanks to improved corporate profitability, governance reforms, and constant attention paid to shareholders by publicly traded companies.
The second quarter marks the seasonal peak for dividends in Europe, representing 36% of total dividends paid during that period (compared to 21% for the full year). Underlying growth, at 3.6%, was constrained by cuts in the automotive sector, although solid payouts from banks and financial institutions helped offset this weakness, backed by the sector’s strong recovery and its growing contribution to European shareholder income. And the United States recorded good growth, with an underlying rate increase reaching 8.7%, while emerging markets lagged behind at 4.7%, mainly due to reductions recorded in the Middle East.
For their part, Spanish dividends delivered an excellent performance in the second quarter of 2026, with total payouts reaching $19.4 billion / €16.6 billion, representing an increase of 16.6% in underlying terms (51.7% in nominal terms). Overall, the figure was in line with the 16.1% underlying growth recorded for the first half of 2026 as a whole. As in many other European countries, the financial sector was the main driver of this growth. All companies in our index increased their dividends or kept them stable year-on-year.
Outlook
The outlook remains positive. Capital Group has revised its global dividend forecast for 2026 upward to $2.23 trillion USD (from $2.20 trillion), representing total growth of 6.4% and an underlying increase of 6% (up from the previous 4.7%). Key factors driving this upward revision include higher-than-expected extraordinary dividends, the depreciation of the U.S. dollar, and a shift in dividend policy by a major U.S. semiconductor company.
Photo courtesyEdmond de Rothschild Headquarters in Monaco
Forty years after establishing itself in the Principality of Monaco, Edmond de Rothschild is moving to its new headquarters in La Condamine. This new 5,300-square-meter building will bring together the private bank’s 270 employees in Monaco under one roof, with the goal of fostering greater collaboration among teams and enhancing the client experience.
Edmond de Rothschild also tangibly reflects the uniqueness of its model. It will serve as the meeting point for multiple areas of expertise from across its Ecosystem: private banking, Edmond de Rothschild wines—displayed in a wine club—and the perfume house Caron, which is opening its first boutique in the Principality.
Forty Years of Presence in Monaco
Present in Monaco since 1986, Edmond de Rothschild takes a new step in its development in the Principality with the inauguration of its new headquarters, located opposite Place d’Armes and the La Condamine market. Built by SCI Esperanza and designed by J.B. Pastor & Fils, the building features eleven floors, seven of which are dedicated to Edmond de Rothschild’s offices.
Conceived as an elegant, open, and luminous townhouse, this new headquarters brings together all of Edmond de Rothschild Monaco’s private banking expertise: bespoke banking, discretionary management, advisory, real estate, wealth planning, and life insurance brokerage.
A Building Designed for Private Banking Operations
The workspaces, distributed between the first and fifth floors, have been designed to encourage knowledge sharing and close collaboration among teams. Abundant natural light, meeting rooms, gathering areas on each floor, and open circulation spaces contribute to creating a work environment tailored to combine precision, agility, and collective intelligence.
The ground floor, as well as the sixth and seventh floors, are dedicated to client reception. The building features eighteen reception rooms, some of them modular, in addition to two large landscaped terraces offering a 360-degree panoramic view of the Principality.
In this environment, the client experience reflects the standards of a luxury Maison: discreet and elegant spaces, carefully selected materials, meticulous attention to acoustics and lighting, and a smooth, comfortable journey at every stage of the visit. A valet parking service and a British-style taxi decorated in the Maison’s distinctive colors and made available to clients complete this experience, designed with the utmost care for detail.
Sustainable Architecture Integrated into the Urban Fabric
The building has earned the BD2M Bronze certification, the Monegasque certification for sustainable Mediterranean buildings. Created by the Principality’s Government, this certification evaluates buildings based on various environmental criteria, including insulation, material selection, and occupant well-being. Additionally, the building incorporates a system that helps optimize its energy consumption.
Its architecture draws inspiration from the characteristic Mediterranean style of La Condamine, featuring a brick facade with glazed tiles, facade cabochons, and wrought-iron balconies. The result is a building that seamlessly integrates into the urban fabric of an ever-evolving neighborhood.
A Family Ecosystem Gathered Under One Roof
Inside, the House’s heritage is expressed through subtle details: the red, blue, and yellow of the family coat of arms, the compass, the five arrows, and references to Château Clarke, Gitana, La Ferme des 30 Arpents, Megève, and Edmond de Rothschild wines.
Located on the sixth floor, the 25-square-meter Wine Club pays tribute to Edmond de Rothschild wines from France, Spain, New Zealand, Argentina, and South Africa. Designed as an intimate and welcoming space, it extends client relationships through a tasting experience reflecting the regions, expertise, and art de vivre characteristic of the House.
On the ground floor sits Caron’s first boutique in Monaco, an 83-square-meter space designed by Casper Mueller Kneer Architects under the artistic direction of Olivia de Rothschild. Exposed concrete, brushed metal, and subtle tones combine to create a sensory experience. At the center of the boutique, a monumental reinterpretation of Caron’s iconic perfume fountains pays tribute to one of the Maison’s historical traditions.
Ariane de Rothschild, CEO of the Edmond de Rothschild Group, commented: “For more than a century and a half, the spirit of Edmond de Rothschild has been an inspiration. We have remained true to its principles without losing sight of the importance of reinventing ourselves. It is this constant commitment that allows us to stay attuned to our times. This new headquarters expresses who we are at our core: an independent, family-owned group, mindful of places, traditions, and human relationships.”
For his part, Gérard Ohresser, CEO of Edmond de Rothschild Monaco, added: “This new headquarters allows us to gather our 270 employees under one roof, strengthen the bonds across our business lines and areas of expertise, and welcome our clients in the spirit of hospitality that defines our House. Designed specifically around our needs and ambitions, the building reflects our way of working: closeness to clients, high-quality interactions, attention to detail, and a strong ability to connect and integrate the various areas of expertise within our Ecosystem.”
The world changes at terrifying speeds, and financial markets do too; today there is a reason why every quarter investors await the financial results of Nvidia, Microsoft, Apple, Alphabet, Amazon, Meta, and Tesla as if they were a leading indicator for the financial markets. No, it is not merely because they are seven of the most valuable companies in the world, but because a growing portion of global portfolios is exposed to them, directly or indirectly. Today, the Magnificent 7 are a genuine dilemma for asset managers, but there are dilemmas and then there are dilemmas; this one might not be entirely negative, but it has its own distinct peculiarities.
Nvidia, Microsoft, Apple, Alphabet, Amazon, Meta, and Tesla—the Magnificent 7—do not only concentrate an extraordinary portion of U.S. market capitalization; the real impact is that because their results, artificial intelligence investments, and growth expectations determine the behavior of indices, ETFs, and investment funds.
Therefore, for managers, the challenge is no longer deciding whether to have exposure to the Magnificent Seven, but how much to hold, how to diversify it, and what to do if market leadership begins to broaden. An investor may have never purchased a single share of Nvidia, yet that does not mean they do not hold it within an S&P 500 ETF, a U.S. growth fund, a global equity strategy, a pension plan, or a portfolio managed by a wealth manager.
This is the true financial dimension of the phenomenon. The so-called Magnificent 7 have become one of the primary transmission mechanisms between the artificial intelligence economy and investment markets. In this sense, their most recent financial results—now that we are in earnings season—show that the story is entering a new phase: it is no longer just about how fast their revenues are growing, but how much money they are forced to invest to sustain that growth and who will ultimately capture the benefits of the AI revolution.
Too Big to Be Ignored
According to Vanguard data, the seven companies combined generated approximately $2.2 trillion in revenue during 2025—a scale that helps explain why they ceased being a mere group of tech companies to become a macroeconomic and market factor. Concentration has also altered the nature of diversification; a fund tracking a market-cap-weighted index may hold hundreds of stocks, yet a significant proportion of its risk and return can end up depending on a relatively small group of companies.
This phenomenon concerns even major asset management firms. BlackRock, for instance, acknowledges that the U.S. market is at historically elevated levels of concentration and posits that the challenge for investors is finding exposure to AI growth without remaining excessively concentrated in today’s mega winners.
T. Rowe Price, for its part, has directly addressed the concentration problem created by the Magnificent Seven and its implications for portfolio construction. That is, the question is no longer whether the Magnificent Seven are good companies, but how much additional risk holding all of them introduces. Nevertheless, all seven are companies that cannot go unnoticed under any circumstances; together or apart, they are simply too big to ignore. Below is a brief summary of why that is the case.
Nvidia: The Company That Turned AI into Financial Results
If one company had to be chosen to represent the transformation of the stock market phenomenon into a financial reality, it would be Nvidia. On August 26, the company reported results for its fiscal 2027 second quarter. The numbers are extraordinary: revenues of $96.2 billion, up 106% year-over-year; Data Center revenues of $89.0 billion, up 117% year-over-year; GAAP net income of $59.7 billion, up 126% year-over-year; and a gross margin of 75%. The company expects revenues of approximately $108.0 billion for its fiscal third quarter.
For asset managers, however, there is an even more important figure: Nvidia is not merely selling chips; it is becoming the primary financial beneficiary of the massive capital expenditure cycle in artificial intelligence infrastructure. The company noted that AI infrastructure buildouts continue to accelerate and anticipated revenue growth of approximately 70% for fiscal year 2028, though it pointed out that its outlook remains supply-constrained. That shifts the conversation within investment funds: Nvidia is no longer just a technology play, but a bet on the capital expenditure of the entire technology industry.
Microsoft: The Other Side of the Boom
Microsoft represents the second major component of the equation: enterprise monetization of AI. In its fiscal year 2026, the company recorded the following figures: $331.8 billion in revenue, up 18% year-over-year; $155.2 billion in operating income, up 21%; and $133.7 billion in net income, a 31% increase. Azure and other cloud services grew 43% during the fourth quarter, according to company data. Meanwhile, Microsoft Cloud reached $214.4 billion in revenue for the fiscal year.
A figure of particular importance to an asset manager is that Microsoft closed the fiscal year with $678.0 billion in commercial remaining performance obligations—a signal of the tremendous visibility it holds over future revenues. But another factor is at play: the company is deploying massive amounts of capital into AI infrastructure, and its margins are beginning to feel the shift in business mix. For investors, a fundamental question emerges: How much of current AI capital expenditure will translate into profitable growth, and how much will weigh on cash flow?
Amazon and Alphabet: When AI Begins to Consume Cash
That same question emerges even more clearly at Alphabet and Amazon. Alphabet raised its 2026 capital expenditure guidance to a range between $195.0 billion and $205.0 billion, up from a previous guidance range of $180.0 billion to $190.0 billion. The company explained that the increase stems from the need to accelerate capacity to meet demand, but it also cautioned that technical infrastructure investments will drive up depreciation and data center operating costs while keeping cash flow under pressure.
This has a direct consequence for asset managers. Until now, the narrative could be summarized as: more AI investment = more growth. Now it is shifting toward: more AI investment = more growth, but also higher capital intensity and cash flow pressure. Amazon exhibits the same phenomenon. In the second quarter of 2026, its sales grew 20% to $200.6 billion, while AWS surged 37% to $42.2 billion. Operating income increased 43% to $27.5 billion.
However, its trailing 12-month free cash flow turned negative to -$7.6 billion, primarily driven by a $66.1 billion increase in purchases of property and equipment, fueled mainly by artificial intelligence investments. For a fund manager, this is a crucial distinction: revenue growth can remain extraordinary while free cash flow temporarily deteriorates due to capex. The question is when that spending will begin generating sufficient returns.
Meta Shows the Cost of the Race
Meta provides another example. In the second quarter, its revenues grew 28% to $60.8 billion, but its costs and expenses rose 55%. The result was a 14% decline in net income to $15.8 billion. The company spent $31.1 billion on capex during the quarter, while generating just $784 million in free cash flow.
For fund managers, this introduces a new variable: the market can no longer evaluate the Magnificent Seven solely through valuation multiples; additional factors must be scrutinized, including capex, depreciation, free cash flow, return on invested capital (ROIC), top-line growth, operating margins, energy consumption, data center demand, and, increasingly, the capacity to monetize AI models.
Apple and Tesla Break Group Uniformity
Signs indicate that the Magnificent Seven no longer behave as a homogeneous block. Apple reported record third-quarter fiscal 2026 revenues of $109.4 billion, up 16% year-over-year, driven by double-digit growth across iPhone, Mac, and Services. Tesla, by contrast, presented a far more complex picture. In the second quarter, it generated $28.2 billion in revenue, up 26% year-over-year, but its operating income fell 57% to $398 million, with its operating margin narrowing to 1.4%. Its capex surged 142% to $5.8 billion, resulting in a negative free cash flow of -$1.1 billion.
This highlights something important: the seven companies are no longer a single trade. Apple represents ecosystems, devices, and services; Microsoft and Amazon represent cloud and enterprise software; Alphabet represents search, advertising, and cloud; Meta represents advertising and social platforms; Nvidia represents AI hardware infrastructure; and Tesla represents electric vehicles, energy storage, autonomy, and robotics. That is why Vanguard cautions that the “Magnificent Seven” label can obscure critical differences among their underlying business models.
The Dilemma for Funds: To Hold or Not to Hold
The influx of figures and business models creates a genuine dilemma for asset managers. An active manager who drastically reduces exposure to the Magnificent Seven risks lagging their benchmark if Nvidia, Microsoft, or the others lead market rallies once again. Conversely, a manager maintaining elevated exposure risks significant relative underperformance if market breadth expands toward small-cap equities, traditional sectors, or international markets. Concentration has become a core risk management issue, not merely a stock selection decision.
BlackRock points out that while the U.S. market is at historical concentration levels, earnings growth prospects are beginning to broaden beyond the Magnificent Seven. The firm notes that the rest of the S&P 500 could narrow the EPS growth gap relative to the mega caps during 2026. As a result, market participants are asking whether it is time for asset managers to seek out the “Magnificent 8, 9, 10…”, as capital may begin migrating from the initial winners to their direct suppliers—a broadening of the investment universe that BlackRock is already highlighting.
In its outlook for the third quarter of 2026, the asset management firm notes that investors are seeking opportunities in the infrastructure, energy, and industrial layers supporting the expansion of AI beyond first-order beneficiaries, which could mark a major transformation for active management. If the first phase of the boom was about buying the mega-cap tech winners, the second phase may focus on identifying the supplier ecosystem capturing the next dollar of capital expenditure—a transition that is already reshaping portfolio construction.
The impact reaches directly into ETFs and index funds. A market-cap-weighted S&P 500 ETF automatically increases its exposure to companies as their market valuations rise. That means an extraordinary rally in Nvidia does not merely benefit direct shareholders; it also increases its weight within numerous index products. Thus, concentration can turn into a self-reinforcing loop: the stock rises → its market capitalization grows → its index weight increases → funds tracking the index must buy more exposure → capital continues to concentrate. This does not necessarily mean an automatic mechanism continues to push the stock higher, but rather that market capitalization dictates how passive capital is allocated. This phenomenon has reached the point where Nvidia accounts for roughly 8% of the S&P 500, according to data recently cited by MarketWatch.
For asset managers, this makes true diversification a far more complex concept. A fund may hold 500 constituents and still remain heavily exposed to the same underlying narratives: AI, cloud computing, semiconductors, digital advertising, and U.S. mega-cap equities.
The Big Question for 2027: What Is AI Really Worth?
Today, the issue is not that the Magnificent Seven are producing weak operational results; on the contrary, their figures remain extraordinary: Nvidia has doubled its revenues, Microsoft grows at a double-digit pace, Amazon is accelerating AWS, Alphabet is ramping up infrastructure investments, Meta is driving strong top-line growth, Apple posts record quarterly revenues, and Tesla is committing growing amounts of capital to AI, autonomous driving, and robotics. However, expectations are now so elevated that the market demands these investments produce increasingly higher returns.
BlackRock summarized this in its 2026 outlook, warning that AI-related capital expenditure has reached a scale large enough to carry macroeconomic implications, while the revenues derived from those investments will arrive with a lag. For fund managers and wealth administrators, the Magnificent Seven represent both an opportunity and a concentration risk.
The opportunity lies in participating in one of the largest technology investment cycles in history; the risk is that much of the market is already fully positioned in it. The next phase of asset management may not center on whether the Magnificent Seven will continue to win, but on discovering which companies will profit as the capital currently flowing into the Magnificent Seven spreads across the rest of the economy.
Photo courtesyChristophe Younes, Senior Executive Director at Carmignac.
Carmignac has inaugurated a new office in the Dubai International Financial Centre (DIFC) after obtaining authorization from the Dubai Financial Services Authority (DFSA) to conduct regulated activities. The firm has also appointed Christophe Younes as Executive Director of Carmignac Middle East Ltd and Head of Middle East.
This initiative marks an important milestone in Carmignac’s international expansion strategy and reinforces its long-term commitment to the region. The DIFC offers a robust regulatory framework, internationally recognized legal standards, and an efficient business environment, making it an attractive location for asset managers with a long-term strategic outlook, such as Carmignac. Dubai’s growing influence as a financial hub, supported by the Dubai Economic Agenda (D33), further strengthens its position as a regional center.
Based in Dubai, Christophe Younes will contribute to the development of Carmignac’s distribution in the United Arab Emirates and across the broader region, focusing on strengthening relationships with institutional and wealth investors. He will be supported by an experienced board of directors, which includes Habib Achkar.
Younes rejoined Carmignac earlier this year from PIMCO, where he was responsible for capital raising for the firm’s public and private investment strategies in France and Monaco, working primarily with private banks and family offices. Previously, he worked at Carmignac for 10 years, starting as a fixed income product specialist before moving to a sales role managing banking and institutional clients across France and Monaco. He is fluent in English, French, and Arabic. He holds a degree in Finance from Paris-Dauphine University and is a CFA charterholder.
Habib Achkar worked for over 30 years at Morgan Stanley, where he held various senior management roles, including Head of the Paris Trading Floor, Managing Director of Morgan Stanley Saudi Arabia, CEO of Morgan Stanley MENA, and ultimately Vice Chairman. He is the founder of Marcory Advisors Limited and joined Carmignac’s board of directors in 2024.
Carmignac’s investment capabilities encompass a broad spectrum of strategies: equities, fixed income, multi-asset, alternatives, and private markets. Its conviction-driven approach positions it well to protect the long-term interests of clients in the United Arab Emirates and across the GCC seeking diversified portfolios amid changing market conditions.
The decision to open a new office in the United Arab Emirates reflects Carmignac’s confidence in the country’s long-term growth prospects and its ambition to build lasting partnerships with local and regional investors in one of the world’s most dynamic and rapidly growing wealth management markets.
Rose Ouahba, Managing Director and Board Member of Carmignac Gestion Luxembourg and Carmignac Middle East, commented: “The opening of a dedicated office in Dubai marks a major milestone in Carmignac’s international ambitions. Building on our extensive experience serving private banks and institutional clients across Europe, we look forward to bringing our expertise to the United Arab Emirates, while learning from local and regional institutions.
I am delighted to welcome Christophe back to the team. His experience advising private wealth clients internationally makes him the ideal person to lead our expansion in this strategically vital and rapidly evolving market. His humility, technical expertise, and passion for this project have been a true source of inspiration as we embark on this new chapter.”
Christophe Younes added: “I am honored to lead the opening of Carmignac’s Dubai office, our first physical presence in the Middle East and the foundation for long-term growth in the region. As one of the world’s most dynamic and advanced financial hubs, backed by an ambitious economic agenda, Dubai offers active, agile, high-conviction asset managers like Carmignac unprecedented access to some of the most sophisticated and demanding investors globally. We look forward to making a meaningful contribution to the local investment ecosystem through our knowledge, expertise, and commitment to building long-term relationships.”
The stock market history of the world is full of episodes that turned autumn into a synonym for risk: 1929, 1987, 1997, 2001, and 2008 are a few examples of years that left behind some of the most violent trading days and periods in these markets.
September is, statistically, the worst month for U.S. equities, while October concentrates several of the largest crashes in history. The above is relevant because in 2026, the calendar once again finds a highly valued market, concentrated in technology and facing fresh pressures on interest rates, inflation, and geopolitics. Although nothing is written and no one can predict the future, it is always important to remember the lessons of history.
It is a fact: Wall Street is about to enter one of the times of the year that instills the most respect among investors; anything can happen.
Not because September or October have, in themselves, the power to cause a crisis. Financial history does not work according to calendars. But a hard-to-ignore coincidence exists: some of the largest episodes of stock market wealth destruction in the modern era occurred during these two months.
The most famous precedent is October 1929. But then came October 1987, October 1997, September 2001, and the dramatic September–October period of 2008. They are different episodes, caused by different problems, but all left the same lesson for asset managers: when a market reaches a zone of high confidence, leverage, concentration, or valuation, any catalyst can turn a correction into a crisis.
September is not superstition, it is the worst month on the calendar; October is the month of frights
The data partially supports the month’s bad reputation. The S&P 500 has historically recorded a negative average return close to -1% in September, making it the month with the worst average performance of the year. Data from S&P Dow Jones Indices show that, since 1928, September records an average return of approximately -1.03% and finishes with gains only about 44.7% of the time.
More recent data point in the same direction. For the long period analyzed by Dow Jones Market Data, both the S&P 500 and the Dow Jones Industrial Average lose an average of around 1.1% in September, while the Nasdaq Composite records an average drop close to 0.8%.
The statistics do not mean that September will be negative every year. In fact, the market can rise strongly during the month. What they mean is that, statistically, the distribution of outcomes is less favorable than in other months. And here appears the first important difference between September and October.
October has a worse reputation, but September is usually worse in terms of average return. October is, above all, the month of big frights. Cboe has noted that October has historically displayed the highest levels of monthly volatility for the S&P 500, although a large part of that characteristic is influenced by extraordinary episodes such as 1987 and 2008.
In other words: September tends to penalize performance more; October has a stronger historical association with extreme moves.
1929: The autumn that forever changed financial history
The first major chapter began even before October. During the 1920s, speculation drove the Dow Jones Industrial Average from 63 points in August 1921 to 381 in September 1929—an increase of approximately six times in eight years. The market reached levels that seemed to justify the idea that it had entered a new era of permanent prosperity.
But the reality was very different; after the September peak, signs of deterioration began. On October 28, 1929, the so-called Black Monday, the Dow lost nearly 13%. A day later, Black Tuesday, it plunged another 12%. By mid-November, the Dow had lost virtually half its value from its peak.
However, the real impact was much greater than the stock market crash; the collapse damaged bank and corporate balance sheets, caused credit contraction, and ended up becoming part of the process that led to the historic Great Depression, the worst U.S. economic contraction of the 20th century, which lasted from 1929 to 1941.
A historical clarification is important: 1929 did not cause the Great Depression on its own. The crash was the financial trigger of a much broader process involving monetary contraction, banking failures, deflation, falling international trade, and other factors.
1987: When the Dow lost 22.6% in a single day
Nearly six decades later, October again became synonymous with panic. It was October 19, 1987—Black Monday—when the Dow Jones plunged 508.32 points, equivalent to 22.61%, the largest single-day percentage drop in its history.
The figure remains impressive: the drop far surpassed the record of 12.8% set on October 28, 1929. The destruction of wealth was devastating; over $500 billion in market capitalization vanished from the New York Stock Exchange that day, while 604.33 million shares were traded, approximately three times the daily average at the time.
Yet 1987 left another fundamental lesson: a market can suffer an extraordinary crash without necessarily triggering an economic depression. The Federal Reserve reacted by providing liquidity to the financial system, and markets subsequently began to stabilize.
It also gave birth to one of the tools that forms part of today’s market infrastructure: circuit breakers, mechanisms designed to temporarily halt trading when declines reach specific thresholds.
1997: The Asian crisis reaches Wall Street
Ten years later, October proved once more that a crisis can travel quickly across regions due to a new era: the era of globalization. On October 27, 1997, amid the Asian financial crisis, the Dow lost 554.26 points, equivalent to 7.2%, after a plunge in Asian stock markets heightened fears regarding global growth and U.S. corporate earnings.
The episode was particularly relevant to the evolution of financial infrastructure; for the first time since their creation, circuit breakers were triggered on Wall Street. The market had to halt trading temporarily and close earlier than usual. The day proved that financial globalization had altered a core market feature: a localized shock could be transmitted to other continents in a matter of hours.
2001: September and the return of fear
The next major historical episode occurred precisely in September; after the September 11 terrorist attacks, U.S. markets remained closed for four trading sessions. When Wall Street reopened on September 17, 2001, the Dow Jones lost approximately 7%, while the S&P 500 fell around 5% and the Nasdaq close to 6.8%. The Dow lost nearly 679 points during the session, its largest single-day point drop at that time.
It was not merely an emotional reaction. The market was already weakened by the bursting of the tech bubble and a deteriorating U.S. economy; September simply concentrated the shock.
2008: When September stopped being a month and became a crisis
The most relevant episode for today’s investors may be 2008; on September 15, 2008, Lehman Brothers filed for bankruptcy protection. The Federal Reserve has described that moment as a turning point that triggered a massive retreat of investors from risky assets and a loss of liquidity in short-term funding markets.
But the crisis did not end with Lehman; Fannie Mae and Freddie Mac had been placed under government conservatorship, AIG faced a liquidity crisis, and the money market fund industry experienced heavy withdrawals after a fund broke the $1.00 net asset value barrier.
During September and October, massive sell-offs spread across virtually the entire financial system; October 2008 ended with a monthly decline for the S&P 500 of nearly 16.9%, ranking among the worst months in the index’s history. The market was no longer reacting simply to bad corporate news; it was pricing in the possibility of a systemic credit crisis.
That is perhaps the main difference between a stock market crash and a financial crisis: the former destroys market value; the latter can simultaneously paralyze credit, the banking system, and the real economy.
The pattern exists, but it is not a prophecy
For portfolio managers, the most important conclusion is probably also the least spectacular: September and October carry no financial curse.
In fact, October finishes with positive returns more often than its reputation suggests. Between 1950 and 2024, the S&P 500 ended October with gains approximately 59% of the time, with an average return close to 0.85%. The issue lies in the magnitude of the extreme episodes.
October includes three of the worst months in S&P 500 history: October 1987 (-21.8%), October 1929 (-19.9%), and October 2008 (-16.9%). That is to say, October does not necessarily drop more than other months; it simply possesses an extraordinary capacity to feature in history books when things go wrong.
Therefore, using the calendar as an automatic sell signal would be a mistake. But using it as a reminder to review risks can be a rational decision, especially when entering autumn with its own set of vulnerabilities—which is when historical comparisons acquire relevance.
Wall Street closed August with gains: the Dow gained around 2.1% during the month, the S&P 500 3%, and the Nasdaq 4.1%, according to recent data. But behind that strength lies a market that is particularly sensitive to expectations surrounding artificial intelligence, interest rates, and growth; at the same time, the macroeconomic landscape has grown complicated.
On another note, no less relevant, military tensions between the United States and Iran pushed oil prices above $90 per barrel at times, while global bond yields rose and the market began pricing in a higher probability of a rate hike by the Federal Reserve in September.
The FOMC meeting is scheduled for September 15 and 16, meaning the market will enter the month with one of its main catalysts occurring right within the historically weakest period for equities—a combination that is especially relevant for asset managers.
A market concentrated in a handful of technology companies can appear solid as long as investors continue paying elevated multiples for future growth. However, if expectations regarding interest rates, inflation, growth, or the return on artificial intelligence investments shift simultaneously, the same concentration that propels the market during rally phases can amplify losses during a correction.
Added to this is the growth of leveraged strategies and derivative products. In 2026, for example, the number of single-stock ETFs with leveraged or inverse positions has multiplied extraordinarily, accelerating the speed at which specific moves can transmit across equities and derivative products.
The real lesson for funds and wealth management
For fund managers, family offices, and wealth managers, the lesson of September and October is not to exit the market, but to ask what would happen to a portfolio if the scenario changes rapidly.
Historical lessons serve precisely that purpose: 1929 taught the danger of leverage and speculative bubbles; 1987 showed that automated trading mechanisms can amplify extreme moves and that market liquidity can vanish much faster than anticipated; 1997 confirmed that financial shocks travel globally; 2001 showed how a geopolitical shock can hit an already weakened market; and 2008 left perhaps the most important lesson for institutional investors: the real risk lies not just in falling stock prices, but in the simultaneous disappearance of liquidity across multiple markets.
That is why, as September 2026 begins, history is not saying that Wall Street will necessarily fall, but it is saying something far more useful for a professional investor: when valuations are elevated, positions are concentrated, and the cost of money becomes a market variable once again, it pays to enter autumn asking not how much higher a portfolio can go, but how much it could lose if history decides to repeat itself.
Because September does not cause crashes, but history proves that when a market enters autumn feeling vulnerable, September and October have proven capable of turning a crack into a fracture.
Markets were hit this Monday by a fresh escalation of hostilities between the United States and Iran, featuring U.S. strikes against IRGC targets on Larak Island in the Strait of Hormuz, and Iranian retaliatory measures against the United Arab Emirates and Jordan. Markets also had to digest the hawkish speech delivered by Fed Chair Kevin Warsh at Jackson Hole, where he reaffirmed the 2% inflation target and noted that “there is work left to do.” As an immediate result, the probability of a Fed rate hike in September quickly jumped from 36% to 67%.
U.S. Bonds: Normalization, Not Fiscal Alarm
The U.S. Treasury yield touched annual highs, approaching 4.8%, while Japanese sovereign debt (with JGBs near 3%) and German debt (Bunds at 3.3%) were also affected.
News regarding U.S. debt reaching $40 trillion helped amplify the noise, though the numbers point in the opposite direction: the historical correlation between the debt-to-GDP ratio and real rates (TIPS) is negative, because until 2017 the government only increased spending substantially during recessions. The fiscal outlook projected by the Congressional Budget Office (CBO) analysis is not optimistic, but for now, nominal economic growth (according to the New York Fed’s model) far exceeds the 10-year bond yield—suggesting that borrowing costs are not onerous for investment—and, surprisingly, Trump has not fulfilled forecasts, as the budget deficit has remained fairly stable since 2024 despite everything.
For all these reasons, although the uncertainty introduced into the macro picture by the closure of Hormuz, the war in Ukraine, Trump’s fiscal policy, or the Fed’s abandonment of forward guidance has impacted bonds, the rise in yields has less to do with the fiscal picture than with the normalization of growth, inflation, and rate trends.
We are coming off a very peculiar 2010–2020 decade, marked by disinflationary dynamics, household and corporate balance sheet deleveraging, and below-potential growth that led major central banks to adopt zero interest rate policies.
Over the past two years, we have witnessed a macro normalization, with inflation rates slightly above the comfort zone and more robust GDP growth. As a result, 10-year real interest rates in the United States have returned to the range where they fluctuated in the mid-2000s, still well below the levels reached in the 1990s, and the term premium has also regularized.
Despite the noise, bond yields have followed the historical pattern of behavior maintained over the last 30 years relative to interest rate expectations (approximated via SOFR futures). This serves to prove that the yield spike has more to do with a new economic reality than with a higher perceived threat of default associated with U.S. debt.
Similarly, if we model the U.S. bond yield using the latest update of the Fed’s economic projections report, we can conclude that the asset is trading at a certain discount, attributable to the uncertainty affecting energy prices.
However, households and businesses are less sensitive to rate hikes than in the previous decade. Their balance sheets have been repaired since then: household debt as a percentage of GDP hovered around 100% between 2008 and 2009 and today stands at 64.85%, levels not seen since 1997. Furthermore, their leverage ratio relative to net worth is at 60-year lows. In the corporate sector, according to the NFIB survey, management teams show no significant concern over interest payments on their debt.
On the Fed, Inflation, and the Labor Market
Additionally, labor market activity and inflation may ease Warsh’s task in the coming months. Bloomberg’s inflation and job creation surprise indices point to a moderation in the Fed’s hawkish stance, a conclusion similar to that drawn from the Truflation index, which incorporates the prices of millions of daily transactions. The August price index data, set to be published on September 11, will have major implications.
An advance indicator came on Thursday with comments from Christopher Waller, who validated signs of easing inflationary pressures while remaining watchful for evidence confirming a trend toward the 2% target. Following his intervention, futures shifted to price in only a 52% probability of a September rate hike. If the monthly core figure comes in at +0.2% as estimated by consensus economists, the Fed will likely maintain a hawkish tone without altering benchmark rates.
In the labor market, we continue operating in a “few layoffs, few hires” environment, although we may be losing some momentum in recent months. The private ADP job creation indicator has maintained a downward trajectory since March, while the Kansas City Fed labor market conditions indicator has yet to find a floor.
Equities: Resilience and Valuation
All told, investors may be overestimating the impact that a 5% yield could have on stock market performance.
The deleveraging process carried out between 2010 and 2020 substantially improved the balance sheets of households, businesses, and banks, making them more resilient to rate increases. Despite tighter credit, demand remains steady or is even improving.
The S&P 500 P/E ratio has compressed from 23x to 19x, and historical evidence shows that the relationship between moves in 10-year bond yields and valuations is inconclusive.
To the extent that the adjustment toward a normalized rate environment remains gradual, earnings-per-share growth will drive valuations over the coming months.
CC-BY-SA-2.0, FlickrAndrea Rossi, Chief Executive Officer of M&G plc, parent company of M&G Investments
In a market characterized by macroeconomic complexity, M&G plc has demonstrated the strength and resilience of its business model by recording its best half-year performance in seven years, consolidating a deep and successful transformation toward a low-capital-intensity operating profile. In this regard, Andrea Rossi, Chief Executive Officer of the Group, noted: “The business is delivering a solid performance, with an adjusted operating profit of £435 million [€504.6 million], up 15% year-on-year, representing our best first-half result since our IPO in 2019. We continue to execute our strategy, successfully orienting the Group toward high-quality, low-capital-intensity (capital-light) earnings, which now account for 80% of total adjusted operating profit.”
This robust performance is underpinned by operational milestones during the first half of 2026 that evidence the success of the corporate strategy. Despite environment volatility, the firm attracted net inflows into its open business worth £2.4 billion [€2.784 billion], an achievement primarily supported by M&G Investments, the Asset Management division, which drew net subscriptions from external clients worth £2.2 billion [€2.552 billion]. The firm reports that numbers were positive across both retail and institutional channels, backed by its expansion in the United Kingdom and internationally.
At the same time, M&G reinforced the diversification of this division by raising external client assets under management and administration to £189 billion [€219.24 billion]—equivalent to 53% of total assets under management for the segment—of which £110 billion [€127.6 billion] comes from international investors. This commercial dynamism also translated into a contribution of £13 million [€15.08 million] in new annualized net revenues within Asset Management, where investor interest in high-value solutions—especially in private markets, which recorded net inflows of £1.3 billion [€1.508 billion] and reached £83 billion [€96.32 billion] in assets—continues to serve as a strategic pillar of growth.
To contextualize these solid capital flows, Rossi added that “net inflows of £2.4 billion [€2.784 billion] in open business reflect the breadth and strength of our offering. Asset Management contributed £2.2 billion [€2.552 billion] in net inflows from external clients, of which £700 million [€812 million] was channeled through our strategic alliance with Dai-ichi Life Group.” This commercial success not only consolidates current figures, but accelerates the firm’s structural shift. Along these lines, the executive further elaborated on the group’s evolution, stating: “M&G continues to grow and transform, becoming a more diversified, efficient, and less capital-intensive business. With a clear strategy, disciplined execution, and the right resources, I am confident in our prospects for the second half of 2026 and our ability to deliver sustainable long-term value to our clients, partners, and shareholders.”
Maintaining the established plan
Looking ahead, the firm stated that it considers itself to be in a privileged position to sustain this financial momentum, relying on its competitive advantages in structurally growing markets. The company’s roadmap is firmly focused on preserving its financial strength, simplifying the organization, and driving profitable growth. In terms of profitability, the entity reiterates its commitment to achieving average annual pre-tax adjusted operating profit (AOP) growth of at least 5% for the 2025–2027 triennium.
Thanks to the business’s strong performance so far this year, management expects to close the 2026 financial year with a low double-digit increase in AOP on a full-year basis.
In parallel, the group is making progress toward its operational efficiency target after recording a cost-to-income ratio of 73% in the first half, with the expectation of continuing to improve it in the second half of the year to approach its 70% target. Likewise, the entity confirms that it is moving at an optimal pace to meet its cumulative operational capital generation target of £2.7 billion [€3.132 billion] for the 2025–2027 period.
Photo courtesyJavier García de Vinuesa, Country Head for Iberia at Natixis Investment Managers.
Fidelity International, a global asset management and retirement savings firm, has appointed Javier García de Vinuesa as Head of Iberia and Latin America, as the firm continues to strengthen its business in the region.
Javier will join Fidelity on September 14 to lead the firm’s operations across Iberia and Latin America. Based in Madrid, he will drive growth and deepen client relationships in the region, reporting directly to Cosmo Schinaia, Head of Southern Europe and Latin America.
Javier brings over 25 years of experience in asset management and distribution. He joins from Natixis Investment Managers, where he served as Country Head for Iberia, overseeing institutional, wholesale, private banking, and strategic alliance channels.
Prior to Natixis, Javier spent 20 years at Robeco in various senior regional and global leadership roles, including Global Head of Wholesale Distribution and Global Financial Institutions. His scope spanned Europe, the Americas, and Asia, including several years based in Miami as Head of Latin America and US Offshore. Earlier in his career, he held senior positions at Société Générale-Lyxor, Merrill Lynch, and Banco Santander.
Cosmo Schinaia, Head of Southern Europe at Fidelity International, stated: “We are delighted to welcome Javier to Fidelity. Iberia and Latin America are important markets for Fidelity International,” adding that “Javier brings extensive experience in the region and a deep understanding of evolving client needs. His expertise will be invaluable as we continue to strengthen our offering and bring more of Fidelity’s capabilities to our clients.”
