Photo courtesyGuillermo Veiga, Chief Information Officer at Capital Group
Capital Group, a global active investment management firm, has announced the appointment of Guillermo Veiga as Chief Information Officer. He will join the firm in November to replace Marta Zarraga, who will retire at the end of the year. Veiga will relocate to California from Singapore, where he currently serves as Group Chief Information & Operating Officer at Standard Chartered Bank.
“Technology, data, and artificial intelligence play an increasingly important role in how we deliver investment excellence, serve our clients globally, and grow our business,” said Rob Klausner, Chief Operating Officer at Capital Group. “Guillermo brings an exceptional combination of deep technological expertise, operational leadership, and a track record in global transformation. His journey leading large, complex organizations makes him the ideal leader to drive Capital’s long-term strategy and position us for the opportunities ahead.”
Born in Uruguay and raised in Spain, Guillermo began his career as a hands-on technician and has held senior management positions in Europe and Asia at Amazon Web Services, Cisco, and Banco Santander, combining deep technical mastery with solid operational experience.
“I was drawn to Capital Group’s long-term commitment to its people and culture, as well as its client-focused mindset,” said Veiga, adding that “Capital Group is at the forefront of technology, and I am excited about the opportunity to help lead the company through a period of global expansion, at a time when data and artificial intelligence have an increasing capacity to transform how we work.”
European thematic investing is growing at a record pace, yet according to the latest study by WisdomTree, retail investors lack confidence in their own ability to navigate this space. Assets in European thematic funds and ETFs reached $422.4 billion in June, but fewer than four out of ten savers or investors feel confident in their ability to identify which theme might outperform over the next five years, according to WisdomTree.
In the view of Pierre Debru, Head of Research, Europe, WisdomTree, that uncertainty appears well founded. “Half of those surveyed believe that themes will take turns performing well, reflecting the reality that thematic leadership rotates over time. This is evident in recent years’ performance, where this rotation has been observed. In 2024, the top-performing theme was ‘Heightened Tensions,’ driven by rising geopolitical friction and increased defense spending,” WisdomTree adds.
In 2025, it was “Strategic Metal Mining Companies,” fueled by the imbalance between stagnant critical mineral supply and rapidly accelerating demand linked to artificial intelligence developments, rising defense investments, and power grid infrastructure upgrades. Furthermore, the firm highlights that in the first half of 2026, “Semiconductors” took the top spot, demonstrating how quickly thematic leadership can shift.
With more than 50 themes available to invest in, choosing the right one is inherently difficult, as explained by the firm, since the issue does not necessarily stem from a lack of understanding or conviction. The survey suggests that European savers already recognize many of the structural trends shaping the global economy, with renewable energy leading as the most likely investment option to hold over the next five years, while one in three believes AI software will gain importance as an investment theme during that period.
Diversification Could Help Uncover the Mega-Caps of the Future
If investors struggle to identify tomorrow’s winning theme, WisdomTree suggests that the solution may not be picking just one. “In the 1990s, it was clear that the Internet would change the world. What was much harder to predict was that Amazon would survive while Yahoo did not. The same dynamic applies to thematic investing today. Identifying a theme with long-term potential is one thing. Knowing how to access those themes through a diversified approach is entirely another, and it increases the chances of landing on tomorrow’s ‘Amazon,'” the company explains. They add that investing in a multi-thematic ETF or fund could reduce the likelihood of missing out on future mega-cap companies, which might emerge from undervalued themes such as quantum computing, the space economy, or physical AI.
The growth of thematic funds is encouraging, but it tells only part of the story in Europe, according to WisdomTree. Retail investors believe in certain themes, yet many still lack the confidence required to act on them. As thematic investing continues to evolve, a diversified, multi-thematic approach could help bridge that gap.
Photo: Fortune Live Media. The Most Important Investment Lesson in the World for Warren Buffett is...
Warren Buffett’s 96th birthday, this August 30, comes at a symbolic moment: after handing executive leadership of Berkshire Hathaway to Greg Abel in early 2026 while remaining as chairman, the market is asking how much of his legacy survives beyond his direct management. The answer, to a large extent, is already written: for more than seven decades, Buffett not only generated historic returns, but also trained—directly or indirectly, through his annual shareholder letters—entire generations of fund managers who today oversee portfolios around the world.
Buffett learned to invest from Benjamin Graham, his professor at Columbia and later his boss at Graham-Newman. Graham’s school—enshrined in The Intelligent Investor—was based on buying companies trading well below their book or liquidation value, almost regardless of the quality of the business. He applied that approach in his early years managing his partnership, but over time—and under the influence of Charlie Munger—he evolved toward what he himself described as preferring a wonderful company at a fair price over a fair company at a wonderful price.
Characteristics of the “Buffett Touch”
Durable competitive advantages (moats). It is not enough for a stock to trade cheap; the company must have a barrier that protects it from long-term competition, such as a brand or a patent.
Pricing power. Buffett repeated on more than one occasion that the most important question in evaluating a business is whether it can raise prices without losing customers to competitors. It is the thermometer he uses to measure the strength of a moat.
Consistent and predictable earnings. He prefers “boring” and understandable businesses with stable profitability track records over high-growth but unpredictable bets.
Capital protection above all. His two most cited rules—”Rule No. 1: Never lose money” and “Rule No. 2: Never forget rule No. 1″—summarize an obsession with the margin of safety: buying at a sufficient discount so that a miscalculation does not destroy capital.
A horizon of at least a decade. According to Buffett, his “favorite holding period is forever.” In practice, he evaluates each investment as if he were going to hold the entire company for ten years or more, forcing him to think like an owner rather than a short-term speculator.
An Exported Model: From Omaha to the Rest of the World
Buffett’s influence, and his approach, directly inspired the birth of the European and Latin American value school. Spain, for instance, is the market with the highest concentration of value management firms outside the U.S. Speaking with Funds Society, Javier Ruiz, Chief Investment Officer at Horos AM, addressed a fundamental question: when choosing a company, what do you look for first, the price or the business?
“We do not believe they can be separated from one another. There are optically cheap companies that are not investable because they do not meet our core investment principles. For us, it is essential to understand a business and the sector in which it operates, that it has a solid and sustainable competitive position, a healthy financial profile, and a management team that performs well, both operationally and in managing the capital generated by the company. If all this is not met, we will not invest in a company no matter how cheap it is trading,” he noted.
Asked about holding periods in the portfolio, the manager indicated: “At Horos, investments coexist where we have never fully divested alongside others that have been in the portfolio for ten years, together with others from which we might divest in a few months because their share price has reflected our investment thesis very quickly. Logically, the primary reason to divest from a company is a reduction in its potential relative to other alternatives.”
Regarding the most common mistake for novice investors, Ruiz pointed out: “Possibly placing an excessive focus on valuation and not as much on understanding what lies behind that valuation. To know if we are buying cheap, a lot of time must be spent understanding the qualitative side of the investment.”
In Mexico, the most literal name in the local segment is Value Operadora de Fondos. But the Buffett philosophy also permeates larger firms like GBM (Grupo Bursátil Mexicano), which, without defining itself as a pure value manager, applies it as a guiding principle of the firm. As Andrés Olea, Financial Product Sales VP at GBM, explained to Funds Society, the search for value is in the company’s DNA: “At the firm level, it is indeed with a very long-term vision and looking for value: caution, good people, values, ethics, expanding its competitive advantage, but ensuring it is durable and not ephemeral due to haste.”
That logic translates explicitly to the wealth management unit: “In advisory, we have a methodology called ‘Invierte con Propósito’ (Invest with Purpose), which aligns closely with creating value over time and staying invested over time, rather than jumping in and out and executing tactical moves.”
As a concrete example in the Mexican market, Olea mentioned Grupo Aeropuertos del Sureste (ASUR) and highlighted that although it is experiencing short-term noise due to lower tourism and fleet renewals, “the quality of the company, its management, and the valuation at which it trades present a very good opportunity for those willing to wait a bit longer.”
Regarding the most common error for beginner investors, Olea is emphatic: “The worst mistake is overconfidence and thinking one can get rich quickly. The best way to build wealth, as Buffett did, is with compound interest on your side and the discipline to save. If you want to get rich off the next AI stock or the next bitcoin, you can make mistakes. So, I would say be patient and let working capital do its magic. Rather than trying to get rich through asset selection, trying to get rich through a long-term methodology with discipline is the path.”
In Argentina, meanwhile, there is no dedicated value boutique like in Spain or Brazil, partly due to the limited depth of the local equity market. The most common route for an Argentine investor wishing to replicate the Buffett philosophy remains indirect: buying CEDEARs of Berkshire Hathaway or companies within its portfolio, trading in pesos on the BYMA. This was explained by Sergio González, CFA, Head of the Investment Office at Cohen Aliados Financieros, and Martín Mejía, Analyst at the Investment Office at Cohen.
The choice of this route, more than a preference, responds to a regulatory constraint: “We do not consider setting up a local fund with that criteria because regulatory issues make it impossible. In Argentina, mutual funds (FCIs) cannot hold more than 25% of the fund in CEDEARs. For that reason, it is not possible to construct a local fund with the same criteria as the portfolio to invest toward the same objective as Warren Buffett,” they told Funds Society.
On the feasibility of sustaining a position “forever” in a context of high macroeconomic and exchange rate volatility, González and Mejía nuanced the literal application of that doctrine: “When talking about local companies, it is very difficult to have a client stay invested or hold a position for a long time. Logically, there are cases where it can be successful, but at the same time, the multiple variables affecting the Argentine market make it very risky.”
The solution again lies in CEDEARs: “We do believe we can build long-term positions through the purchase of CEDEARs under the logic of value investing. In this way, the investor hedges against exchange rate shifts and maintains long-term investments in international market companies,” they concluded.
Alternative investment firms are underinvesting in the management of compensation and carry programs at a time when competition to attract and retain specialized talent is intensifying, according to the 2026 Alternatives Compensation & Carry Survey conducted by Allvue Systems in collaboration with Major, Lindsey & Africa (MLA).
The report reveals a growing gap between the strategic importance firms place on talent and their operational readiness to manage compensation and long-term incentive programs. Half of the surveyed companies admit that they do not administer compensation with the same level of rigor applied to other critical business functions, a situation that could put the retention of experienced professionals at risk.
Only 11% of firms state that their carry administration capabilities are ahead of their peers, even as investment professionals increasingly demand greater transparency regarding how their contributions translate into economic incentives.
“This year’s survey highlights a growing risk for private market firms. The management of carry and compensation is not receiving the necessary attention at a time when talent is increasingly mobile and demanding,” noted Richard Change, Head of FirmView at Allvue Systems.
According to Change, asset managers and general partners seek to understand the relationship between their contribution and their remuneration, and firms that fail to communicate this clearly will lose ground to those that do. “Integrating compensation and carry into a single, transparent view is a key factor in attracting talent and enhancing performance,” he added.
For her part, Allison Rosner, Managing Director in MLA’s In-House Counsel Recruiting Practice, emphasized that in hiring processes for senior executives in the alternative assets sector, compensation goes far beyond salary and bonus.
“Candidates increasingly evaluate how firms structure, communicate, and align long-term incentives with the value they contribute to creating,” Rosner explained.
A Growing Gap in Employee Experience
The study shows that many firms have yet to achieve the level of transparency, education, and visibility that employees expect regarding compensation and carry programs.
Fewer than half of the surveyed companies provide Total Rewards Statements (TRS)—documents that consolidate information on salary, bonuses, carry, and co-investments.
Furthermore, only 36% admit to investing in education and training programs on carried interest-linked compensation, while barely 24% offer formal mechanisms to gather feedback on their carry programs.
The study also points out that merely 16% of firms consider employee feedback a relevant factor in compensation decisions.
Another challenge is the widespread use of discretionary carry: 56% of firms acknowledge relying on this mechanism to some degree. This implies that, for many participants, outcomes depend largely on individual judgment rather than clearly defined parameters, which can raise concerns about the consistency and fairness of allocations.
Manual Processes and Lack of Data Limit Program Evolution
The research identifies major operational shortfalls that hinder the modernization of compensation and incentive systems.
58% of firms still use Excel spreadsheets to manage carry, a practice that can limit their ability to deliver consolidated, up-to-date information to employees. In terms of compensation planning, only 18% of companies consider themselves leaders relative to their competitors, while more than half cannot confirm that their practices are data-driven. Likewise, 42% admit they do not have clearly defined salary bands by function or professional level.
As firms expand participation in carry programs and develop more complex compensation structures, these operational limitations become harder to manage. Reliance on manual processes reduces the ability to make transparent, consistent, and well-founded decisions.
Competition for Talent Will Shape Incentive Trends in 2026
Alternative investment firms anticipate that several factors will continue to shape their compensation and carry programs over the coming year.
Among the primary challenges identified are:
Intensifying competition for talent across firms and investment strategies.
Rising expectations among professionals regarding communication and transparency.
The difficulty of generating returns and aligning incentives with effort and performance achieved.
The report concludes that, in an environment marked by higher labor mobility and growing professional expectations, firms that enhance their compensation, communication, and carry administration processes will gain a competitive edge in attracting, motivating, and retaining key talent.
U.S. Treasury Secretary Scott Bessent disclosed in an appearance on Monday that the department could increase its bond buyback capacity by conducting market purchases that might exceed $4 billion. This measure comes after a surge in real yields pushed up long-term borrowing costs on U.S. debt, a movement suggesting markets are concerned about the fiscal and inflationary outlook.
Total U.S. federal debt recently surpassed $40 trillion. Experts explain that the high U.S. fiscal deficit will likely require an increase in Treasury bond issuances, coming at a time of fierce competition with planned long-term corporate debt offerings from major technology companies.
Libby Cantrill, Head of Public Policy at PIMCO, recalls that the Treasury has been conducting this operational process for some time. Since May 2024, it has carried out regular Treasury buybacks for various reasons, primarily “to support Treasury market functioning by buying older, less liquid bonds (‘off-the-run’) and generally re-issuing newer, more liquid ones (‘on-the-run’).” This program operated on a schedule published on the agency’s website. “It is clear that Bessent’s announcement represented a departure from that regular and predictable approach,” she notes.
However, considering that this program is “relatively small” and “is not quantitative easing (QE),” the expert emphasizes that buybacks do not fundamentally alter market conditions. Cantrill explains that long-term Treasury yields have risen for several reasons, including stronger U.S. economic growth, a heavy debt burden, a surge in corporate bond issuances tied to artificial intelligence, and persistent inflation concerns linked to energy costs. She also points out that yields are only high “when compared to recent history, and not necessarily when compared to very long-term averages.”
In summary, Cantrill concludes that while buybacks at the long end of the yield curve can technically lower yields—since higher demand leads to higher prices and lower yields—the underlying reason why Treasury yields are elevated “is not going to change in the short term.”
Focus on Reducing Financing Costs
UBS comments that this measure “highlights the importance that the U.S. government places on reducing long-term financing costs.” For investors, according to the firm, the fundamental question now is “how to respond, if at all, to rising yields.” Their baseline scenario remains that yields should fall as inflation moderates. “Over the longer term, initiatives that lead to financial repression and artificially lower yields should be favorable for equities, while gold would be another beneficiary of this scenario,” the firm notes.
Joseph Purtell, Portfolio Manager at Neuberger Berman, also focuses on falling inflation—and the resulting shift in monetary policy expectations—as the primary driver for lowering long-term yields. While he also mentions the relevance of significant fiscal consolidation, he considers it “more difficult in the short term.” Consequently, he continues to see value in the short end of the U.S. Treasury curve, particularly in 2- to 5-year maturities, which offer “both positive carry and potential price appreciation should the Fed keep rates on hold for the remainder of the year.”
To be sure, Purtell does not believe the current level of yields is inherently problematic for real economic activity or credit conditions, as corporate earnings have been strong and credit spreads remain well behaved, even if not at historical tights. However, he cautions that a steady rise in yields, especially if the adjustment happens rapidly, increases the risk of a sharp tightening in financial conditions that could weigh on real activity. Still, he does not view that as the current situation.
Meanwhile, David A. Meier, Economist at Julius Baer, points out that this move aligns with a broader policy trend favoring lower borrowing costs and “raises concerns about politically motivated initiatives aimed at capping interest rates ahead of the midterm elections.” He adds that in earlier times, “one would have expected the Federal Reserve, rather than the Treasury, to attempt to ‘manipulate’ rates downward.” Regarding investment strategies, he notes that “this development fits with our long-term bearish outlook on the U.S. dollar.”
As U.S. public debt surpassed the $40 trillion mark for the first time in history, long-term U.S. yields have reignited alarms over the cost of financing debt, in a potentially explosive cocktail that has raised red flags across financial markets, given that interest expenses have already become one of the fastest-growing budget items for the federal government. Markets remain on edge, awaiting the press conference by U.S. Treasury Secretary Scott Bessent, scheduled for today at 14:00 ET.
“Forty trillion dollars of debt does not in itself represent a macroeconomic tipping point,” says Christian Scherrmann, Chief U.S. Economist at DWS. “However, this figure clearly illustrates the extent to which U.S. fiscal policy has strayed from its historical path. In the long run, what will matter is not only the absolute level of debt, but also what proportion of economic output must be allocated to servicing it,” the expert warns.
In this context, the Federal Reserve maintains a restrictive stance, and the Treasury intervened last week to curb the rise in yields. According to analysts, the signal to markets is clear: money will no longer be as cheap or abundant as it was over the past decade. Put another way, the U.S. financial market is sending a signal that stock markets still seem unwilling to hear: the long-term cost of capital is taking on a life of its own.
An increasingly uncomfortable combination
While major equity indices continue to show resilience, the U.S. Treasury bond market—considered the benchmark for pricing virtually every financial asset in the world—is facing an increasingly uncomfortable mix of high inflation, massive government financing needs, strong capital demand for artificial intelligence and infrastructure, and doubts surrounding the future path of interest rates.
Tensions reached a notable milestone on August 19, when the Department of the Treasury announced that, starting in September, it will double the maximum size of its long-term bond buyback operations, raising them from $2 billion to at least $4 billion per operation for securities with maturities between 10 and 30 years.
The market reaction was immediate. The 30-year Treasury yield, which had topped 5.3% last week, fell about 10 basis points following the announcement, while equities and gold advanced. The move was significant because it came after long-term rates reached levels not seen since before the 2008 financial crisis. DWS notes, however, that “markets continue to offer few signs that investors are fundamentally questioning U.S. solvency,” given that demand at Treasury auctions remains solid, U.S. CDS spreads recently fell to 38 basis points, and even repeated sales by foreign investors—for example, during interventions on the Japanese yen—have failed so far to disrupt market balance. “Markets are signaling higher financing costs, but not a crisis of confidence,” the firm asserts.
However, money market specialists consulted by Funds Society point out that the most important message does not lie in the temporary drop in yields. It lies in why Washington felt the need to act.
It was not the Fed, but it was an intervention
The operation announced on August 19 was not a bond purchase by the Federal Reserve, nor was it a new quantitative easing (QE) program. It was a Treasury decision within its debt buyback program, originally designed to improve market liquidity.
The Treasury buys specific off-the-run bonds trading in the secondary market and, in doing so, helps free up balance sheet capacity for primary dealers and improve liquidity in specific segments of the curve.
Wednesday’s decision significantly increased the size of those operations for long maturities. The distinction is crucial: while the Fed controls monetary policy and financial system liquidity conditions, the Treasury manages the government’s financing needs. Nevertheless, both end up influencing the same variable: the price of money. And that is where one of the major market stories for the second half of 2026 emerges.
The Fed is not cutting rates
At its July 28–29 meeting, the U.S. Federal Reserve maintained the federal funds rate target range at 3.5% to 3.75%, a decision approved by a 9 to 3 vote.
The three dissenters—Beth Hammack, Neel Kashkari, and Lorie Logan—wanted to hike the rate by 25 basis points. In other words, a section of the Committee felt that the inflation problem justified additional tightening.
However, there is another particularly important element to understanding the bond market. The Fed continues to operate under an ample reserves regime. Its guidelines permit open market operations and, when necessary, purchases of Treasury bills and potentially other Treasuries with maturities of up to three years to maintain an ample level of bank reserves.
This means that the Federal Reserve is not engaging in QE in the traditional sense, as experts explain to Funds Society, but nor is it allowing bank liquidity to contract in a disorderly manner—a distinction that is highly relevant. Last week’s intervention should be understood more as market “plumbing” than a radical shift in monetary policy. But even that “plumbing” is acquiring enormous importance.
In this sense, the current strategy can be understood as a balance between two objectives. On one hand, the Fed wants to prevent bank reserves from falling too low and causing friction in the money market.
On the other hand, it does not want to return to the massive balance sheet expansion used during the pandemic and other crisis episodes. The Fed has indicated that it can use purchases of Treasury bills and, if necessary, other short-term securities to ensure that the system maintains sufficient reserves.
Furthermore, it maintains standing repo and reverse repo operations. Repo operations allow liquidity to be provided against high-quality collateral, while reverse repos temporarily absorb liquidity. The New York Fed explains that these operations form part of the mechanisms used to keep the federal funds rate within the range established by the FOMC.
Therefore, it would be incorrect to interpret any Fed liquidity operation as an automatic return to monetary expansion. In reality, the Fed is trying to manage liquidity without necessarily expanding its balance sheet aggressively again.
The problem is at the long end of the curve
According to analysts, this is the section that should concern investors the most. The Fed directly controls short-term rates, but it does not set the 10-, 20-, or 30-year Treasury yield.
Those rates depend on expectations for inflation, growth, fiscal deficit, bond supply, international demand, and the term premium. And that is precisely where pressures are emerging.
The 30-year Treasury reached over 5.3% last week, as the market faces a massive supply of U.S. public debt. At the same time, U.S. inflation remains above the Fed’s 2% target. The July minutes note that inflation remains elevated and that energy-related price increases are complicating the outlook.
The result is a difficult equation: more debt + higher issuance + above-target inflation + strong capital demand for AI and infrastructure = upward pressure on long-term rates.
The market is starting to demand a premium
For much of the past decade, investors grew accustomed to a world of ultra-low rates and abundant liquidity. That environment allowed equity, real estate, and private asset valuations to expand significantly.
Now the landscape is changing. An investor purchasing a 10- or 30-year Treasury is not only evaluating whether the Fed will cut or raise rates at its next meeting. They are also asking how much risk is involved in lending money to the U.S. government over decades.
That question increases the so-called term premium—that is, the additional yield investors demand to hold long-term debt given uncertainty surrounding inflation, growth, deficits, and economic policy.
And if that premium continues to rise, the Fed could lower short-term rates and still find that the rates that truly matter for much of the economy remain high. That is why the Treasury’s move is so important.
The Treasury’s announcement has a relatively small immediate effect compared to the overall size of the Treasury market, which stands at around $31 trillion. But its importance does not lie solely in the $4 billion per operation; in fact, that figure is also modest—what is truly important is the signal.
In practice, the powerful U.S. Treasury is telling the market that it is not indifferent to excessive turbulence at the long end of the curve.
“Policy makers do not have to be passive observers. When pressure emerged at the long end of the curve, the Treasury showed it has tools and is willing to use them,” commented Brian Levitt, Chief Global Market Strategist and Head of Strategy & Insights at Invesco. According to Levitt, the Treasury’s announcement reinforces something he has long believed: “The U.S. government is unlikely to sit idly by and allow a disorderly debt crisis to unfold if it has mechanisms to help address it.”
Paradoxically, the U.S. administration needs to keep the cost of financing its massive debt under control, while at the same time the Fed needs to maintain a sufficiently restrictive stance to combat inflation. There are signs that the problem may grow: according to a note published by DWS on Friday, August 21, if current borrowing trends persist, total U.S. Treasury debt could reach $50 trillion by 2029.
The Treasury wants to prevent long-term rates from spiking, whereas the Fed does not want to give the impression that it is bailing out the bond market. These are objectives that may align at times, but they are not exactly the same.
The real risk
The real risk is that equities could continue rising while the bond market deteriorates for a period of time.
However, that divergence cannot widen indefinitely because a higher long-term Treasury rate means, among other things: higher financing costs for corporations; higher mortgage rates; higher borrowing costs for governments; lower valuations for growth equities; higher cost of capital for infrastructure projects; pressure on private equity; higher return hurdles for private credit; and a higher discount rate for virtually all financial assets.
That is why the behavior of the Treasury is particularly relevant for investment funds, asset managers, wealth management, and family offices. It is not simply a matter of deciding whether to buy or sell bonds. It is a matter of determining what price every financial asset should carry in a world where long-term Treasuries are once again demanding significantly higher yields.
There is also a variable that sets this cycle apart. The U.S. economy is entering a phase of massive investments in data centers, semiconductors, energy, power grids, and technology tied to artificial intelligence, meaning the government is not the only major seeker of capital.
This competition can help keep financing costs elevated even if the Fed eventually begins cutting short-term rates; the problem, therefore, may not be purely monetary—it may be structural.
What does it mean for investors?
For portfolio managers, the scenario forces a review of a premise that dominated much of the past decade: that a drop in Fed rates would necessarily trigger a broad-based bond rally.
Today, that premise might not hold true. If short rates fall but long rates remain elevated due to deficits, inflation, debt supply, and capital demand, the yield curve could behave very differently than expected.
The Fed is keeping its benchmark rate at 3.50%–3.75%, retains tools to guarantee an ample supply of reserves, and has not reactivated a policy of massive asset purchases. At the same time, the Treasury has just increased its long bond purchases to improve market conditions. The combination leaves an open question for the coming months:
Can the United States keep inflation under control, finance a debt exceeding $40 trillion, and simultaneously fund the gigantic investment cycle in artificial intelligence without causing the long-term cost of capital to remain elevated?
The answer will be decisive not only for Wall Street, but will also define the returns investors worldwide will demand in the coming years, experts warn.
Asset manager Franklin Templeton has announced the successful closing of Franklin Templeton Structured Solutions 2026, L.P., its first Collateralized Fund Obligation (CFO), raising $1.5 billion from investors worldwide.
CFOs are a structured form of financing for diversified private equity portfolios, establishing multiple debt tranches with priority over equity holders. According to the firm, the product is designed to provide investors with diversified, capital-efficient exposure to Franklin Templeton’s primary private markets strategies. This includes private equity secondaries and continuation vehicles managed by Lexington Partners, as well as U.S. middle-market direct lending managed by Benefit Street Partners (BSP)—Franklin Templeton’s alternative credit specialist—across multiple vintages and a broad array of underlying portfolio companies.
Growing Demand for Private Market Diversification
“We are seeing growing client demand for access to differentiated private market strategies through efficient, scalable structures,” said George Stephan, Global Chief Operating Officer, Wealth Management Private Markets at Franklin Templeton. “This first CFO responds directly to that demand by combining the specialized expertise of our private market managers into an offering that reflects the full scope of capabilities Franklin Templeton can deliver.”
“This transaction demonstrates how structured solutions can bring together distinct private market capabilities to meet the evolving needs of institutional portfolios,” noted Jake Williams, Co-Head, Private Markets Product at Franklin Templeton. “The transaction leverages the breadth of Franklin Templeton’s private markets platform and our ongoing commitment to developing innovative solutions that help clients achieve their objectives.”
The successful closing marks a significant milestone for Franklin Templeton, establishing a new capital-raising channel for its private markets platform and positioning the firm to capitalize on rising demand for structured private market solutions as adoption spreads across a broader range of investors, including registered investment advisors (RIAs), family offices, insurance companies, and wealth distributors.
Franklin Templeton currently manages $295 billion in alternative assets under management (as of July 31, 2026) and offers a diversified private markets platform that includes Lexington Partners (secondaries and co-investments), Clarion Partners (private real estate), Benefit Street Partners (private credit), and Franklin Ventures (hedge strategies and digital asset capabilities).
As regulatory frameworks across the U.S., Europe, Asia, and the Gulf mature and converge in their treatment of digital assets, crypto investors are rethinking not only asset allocation but also their legal domicile. The core question has shifted from which assets to hold to which jurisdiction enables compliant holding, banking, and reporting under increasingly stringent oversight standards. This is the central finding of “Crypto Secure Jurisdictions: Where Crypto Actually Works,” a global report produced by Global Citizen Solutions (GCS), an international firm specializing in residence and citizenship planning.
The report evaluates how 22 jurisdictions integrate digital assets into tax systems, licensing regimes, and banking frameworks as cryptocurrencies transition into regulated financial infrastructure.
“Residency or citizenship determines how digital assets are taxed, reported, and maintained within the banking system,” stated Artur Saraiva, COO of GCS. “As crypto oversight expands, mobility serves as a structural hedge.”
Distinct Market Profiles
The study identifies three core traits common to resilient crypto jurisdictions: regulatory clarity (defined legal status and formal oversight), institutional infrastructure (regulated exchanges, custodians, and banking access), and predictable tax and compliance treatment.
Rather than naming a single “best” destination, the report categorizes countries by function:
Institutional Benchmark Jurisdictions: Switzerland, Singapore, Germany, the UK, and Canada prioritize legal certainty and integration into broader capital markets.
Structuring & Mobility Hubs: Portugal, Malta, Estonia, and the UAE balance regulatory alignment with attractive residency and tax-planning frameworks.
Deep Capital Markets: The U.S. remains the deepest market for digital capital, albeit under a multi-agency regulatory perimeter.
The report asserts that investment-driven migration now acts as a form of jurisdictional optionality, allowing cross-border investors to diversify regulatory exposure and structure operations under stable legal frameworks.
Regional and Emerging Paradigms
In Latin America, Brazil leads adoption while formalizing its framework under the Banco Central do Brasil to strengthen virtual asset service provider (VASP) compliance. El Salvador continues its state-level adoption model anchored by its Digital Assets Law, offering a high-conviction ecosystem distinct from traditional financial centers. Elsewhere, Caribbean nations with Citizenship by Investment programs are embedding digital assets into existing AML/CFT structures to safeguard credibility while accommodating financial innovation.
Wikimedia Commons"The South Sea Bubble, a Scene in 'Change Alley in 1720" by Edward Matthew Ward
The AI craze and the rallies it has generated in stock markets—especially in the United States—have put the debate over valuations back on the table. While some contend that this is a technology so revolutionary that it can handle all investor dreams, others see a promise too overblown to meet the market’s heavy expectations. Although the question of whether there is a bubble in AI-related stocks remains unanswered for now, the history of financial markets contains some relevant examples.
One of these is the so-called South Sea Bubble, which starred a British company that found successive new heights based on the excitement generated by its royal backing and the slave trade. In a matter of months, the stock inflated to unsustainable levels, and when the bubble burst, the scandal reached the doors of the English Parliament.
Founded in 1711 as a public-private partnership aimed at consolidating, controlling, and reducing the national debt and helping the United Kingdom participate in the lucrative slave trade, The South Sea Company sparked the interest of investors of the era.
In 1713, they secured the monopoly for the trade of enslaved Africans in the South Pacific Ocean, among the Spanish colonies in the Americas. The document known as the “asiento de negros,” a monopoly contract signed between the Spanish Crown and merchants from other countries, served as the framework for the business. This was because the Spanish monarchy preferred not to participate directly in the practice, instead subcontracting services from other European powers.
The Fever Begins
Considering how profitable the slave trade had been over the previous two centuries, the expectation was that the operation would be highly lucrative. The enthusiasm was boosted by the idea that foreign trade would normalize following the end of the War of the Spanish Succession in 1713.
This prospect, along with the confidence generated by the royal backing of the company, attracted a variety of English investors. There are even reports that the physicist and mathematician Sir Isaac Newton participated in this financial fad, investing the modern equivalent of millions of pounds sterling.
Initially, the firm offered a 6% interest rate to those who bought the stock, but the excitement around the shares drove them to a peak in 1720. And the stock maintained its strength, even though no slave trade boom materialized after the signing of the Treaty of Utrecht, which ended the war.
The Spanish gave the British a limited portion of the business and even kept part of the profits, placed taxes on the importation of slaves, and put strict restrictions on the fleets of ships they could send. This undermined the profit prospects of the business.
However, the stock price continued to scale, supported by royal backing. In 1718, King George I of Great Britain assumed the governorship of The South Sea Company, which generated further confidence among the investing public, driving prices higher and coming to generate a 100% interest in the shares.
The Beginning of the End
As happens with many bubbles, prices detached from business fundamentals. Considering that the trade of enslaved Africans was not generating the necessary revenue to justify the stock boom, the rally began to falter.
Furthermore, the company was trading more and more of its own shares and was beginning to participate in questionable practices. There are records of people within the company pressuring—or bribing—their friends and acquaintances to buy shares, keeping valuations high, and there were even bribes and other acts of corruption involving British ministers and officials.
In 1720, the year the house of cards fell, the British Parliament allowed The South Sea Company to buy the national debt. The company paid out 7.5 million pounds to acquire a debt of 32 million pounds. The plan was to use the profits from share sales to pay the interest on the debt.
It was at this moment that the stock price reached its peak. The company’s shares went from about 100 pounds sterling in 1719 to 128.5 pounds in January 1720. From that point, widespread market enthusiasm took it over 1,000 pounds in August of that year.
Shortly after, the price collapsed to little more than its IPO price.
The dilemma of the model created by The South Sea Company is that it was a kind of financial carousel, where the expected added value from the slave trade did not materialize. Instead, the company was inflating its stock price with its own market operations against the public debt it acquired.
The Bursting
The turning point was in September 1720, when the shares began to fall. Once doubt set in, investors began to lose faith and sell the stock, causing prices to plummet. The British company’s stock ended up falling back to 124 pounds in a matter of days, accumulating a drop of more than 80% from its highest point.
The end of the bubble brought heavy losses with it and, along with them, outrage among the investing public. Because the collapse happened in the dawn of the English stock market—the creation of The Royal Exchange dates back to 1571, driven by Queen Elizabeth I—there were no explanations available for the level of speculation the bubble generated in the first place.
A significant number of people lost a lot of money, to the point that the suicide rate increased, according to reports of the era, and those affected reached the political sphere demanding explanations. Thus, Parliament launched an investigation that uncovered the company’s bad practices, turning into a financial and political scandal.
In response, lawmakers passed the Bubble Act of 1720, prohibiting the creation of joint-stock companies like The South Sea Company without special permission by royal charter.
Mind you, although the effect was highly publicized, it did not have a major impact on the general economy and did not generate a recession, unlike other famous bubbles in history.
The company, for its part, continued to trade until 1853, undergoing a restructuring in the interim.
Over the past decade, Europe appeared condemned to lower growth, less innovation, and more modest returns. However, this consensus is beginning to reverse. An improving economic cycle, increased spending on infrastructure and defense, a push toward reindustrialization, and the development of new technologies are putting Europe back on investors’ radars. Lazard, Edmond de Rothschild, MFS, Aberdeen, and Neuberger agree that the continent is reaching an inflection point, opening up investment opportunities in both equities and fixed income—though they warn that the potential lies not so much in overall indexes, but in the sectors and companies capable of benefiting from this new cycle.
This shift in perception is not driven solely by better economic performance. Underlying fundamental economic improvements are beginning to back the investment thesis. Benoit Anne, strategist at MFS Investment Management, highlights that Eurozone growth has positively surprised in recent weeks, with leading indicators pointing to a stronger-than-expected recovery. Specifically, he underscores that the Eurozone Citi Economic Surprise Index reached its highest level since early 2023—a sign that the European economy’s resilience is proving greater than anticipated by the market. In his view, this environment reinforces the appeal of both European equities and credit.
This macroeconomic improvement coincides with a structural shift that several asset managers view as a primary investment driver for the coming years. Edmond de Rothschild Asset Management contends that Europe is undergoing a “silent revolution” propelled by increased investment in infrastructure, defense, electrification, and artificial intelligence. Unlike other cycles, they explain, the potential is not limited to a handful of large-cap companies, but spans the entire industrial value chain, with small- and mid-cap companies playing a particularly prominent role.
Reindustrialization Shifts From Narrative to Opportunity
In this regard, Craig Wright, Head of European and Asia-Pacific Real Estate Investment Research at Aberdeen, points to the new global European policy, “Made in Europe.” Designed to raise manufacturing industry output to 20% of GDP by 2035, this initiative is driving a structural transformation that Wright believes will require massive investments in factories, logistics, pharmaceuticals, energy, and semiconductors.
According to the Aberdeen manager, certain figures are striking: reaching the target of industry representing 20% of European GDP by 2035 will require building roughly 20 million square meters of industrial and logistics space every year for a decade. Furthermore, defense spending alone could generate demand for an additional 37 million square meters, over and above e-commerce growth.
Capital Looks Toward European Fixed Income
Benoit Anne of MFS considers Euro high yield to currently be the most attractive asset class in global fixed income from a risk-adjusted carry perspective. Meanwhile, Paul Grainger, Managing Director and Senior Portfolio Manager for Fixed Income at Neuberger, offers a counterpoint: Europe remains more interest-rate sensitive, and growth still displays vulnerabilities. Yet, precisely for these reasons, he believes European fixed income is once again offering compelling opportunities.
“European real yields have also risen as the ECB raised rates and continued to guide or allow the market to price in further hikes; currently, the market is pricing in two additional hikes over the coming year, which would put official rates at 2.75%. The impact of AI spending appears smaller in Europe, but we must still account for positive correlations and links between major developed bond markets,” Grainger explained.
The Major Catalyst: Increased Public Spending
Rising expenditure on infrastructure and defense could become one of the primary drivers of European growth over the coming years, provided the geopolitical landscape does not significantly impair the economy. On this point, Ronald Temple, Chief Market Strategist at Lazard, explained that the war with Iran penalized Eurozone growth forecasts more than those of any other major developed economy this year.
“Even so, I maintain an optimistic outlook and believe the region’s GDP will accelerate heading into 2027, driven by higher infrastructure and defense spending. As long as the war continues, Eurozone inflation will remain exposed to energy price volatility. However, there are few signs of spillover from energy into the broader economy, giving me confidence that inflation will ease by 2027,” Temple emphasized.
Without a doubt, expert consensus presents Europe as a major investment opportunity ahead of the next economic cycle. While international geopolitical ambiguity means conditions could evolve rapidly, experts remain notably optimistic regarding the continent’s outlook.
