Although all eyes are on the record highs gold is setting, the truth is that another precious metal is experiencing a true rally: silver. It posted a spectacular year-end surge that has continued into the early weeks of 2026. In fact, in 2025, the metal appreciated by nearly 150%, clearly outperforming gold.
So far, gold’s current bullish trend has been supported by falling real interest rates, a weaker dollar, and market concern over the implications of rising U.S. public debt levels, the cost of servicing that debt, and the impact on U.S. Treasury bonds. But what factors are driving silver’s performance?
According to Claudio Wewel, currency strategist at J. Safra Sarasin Sustainable AM, the silver market has recorded a structural supply deficit for five consecutive years. “However, this imbalance hadn’t triggered a significant price reaction until 2025, when the uptrend accelerated and took on a virtually parabolic pattern toward the end of the year,” he notes. Wewel attributes this sharp upward movement, which even surpassed the absolute price increases seen ahead of the peaks in 1980 and 2011, to the combination of several factors:
Decline in U.S. interest rate expectations: In the second half of 2025, the market began to focus on the appointment of a successor to Federal Reserve Chair Jerome Powell. “The expectation of a more accommodative Fed, which could implement several rate cuts in 2026, has weakened the U.S. dollar and increased the appeal of non-interest-bearing assets such as silver and gold,” he notes.
Inclusion on the U.S. critical minerals list: In early November 2025, the U.S. Department of the Interior added silver to its list of critical minerals. Thanks to its high electrical conductivity, this material is essential for manufacturing high-performance chips and for the development of infrastructure linked to artificial intelligence. Its inclusion on the list, along with fears of potential U.S. tariffs on silver, alerted the market to potential supply risks and prompted an advance in silver shipments to the U.S. As a result, the London market recorded physical outflows of the metal, reducing local reserves.
Chinese export restrictions: Since the beginning of the year, China has implemented stricter controls on silver exports. This decision is part of a broader strategy to secure access to critical minerals and limits silver exports during 2026 and 2027 exclusively to government-approved companies.
Growing relevance as a store of value: Finally, silver is gaining prominence as a monetary metal. Compared to other commodities, its storage cost is low, and it has a long historical track record as a key material in coinage. The high per-unit cost of physical gold purchases is excluding many low- and middle-income buyers in emerging markets, positioning silver as a more “affordable” alternative to gold in these countries. As a result, household demand has increased in India and China. In Shanghai, buyers are paying a premium of around $10 per ounce over the London market price.
“The sharp surge in the price of silver has brought the gold/silver ratio to around 50. Given that this indicator fell to levels near 40 in previous bullish cycles, silver could significantly surpass $100 per ounce in the current cycle. In principle, our positive view on gold supports this scenario, and speculative positions do not appear excessive,” states Wewel.
However, he warns that although the physical supply deficit should keep silver prices elevated in the short term, the metal tends to experience much deeper corrections than gold after a prolonged rally due to its higher volatility. “Since momentum is losing strength, the risk-return balance now seems less attractive for silver. This also implies that, from these levels, it should be difficult for silver to continue outperforming gold,” he concludes.
Tensions have eased for now, but the controlled disorder on the geopolitical front is here to stay, which also brings a new perspective on the role of certain financial assets. According to some experts, while gold is gaining traction among investors, U.S. Treasury bonds, another classic safe-haven asset, appear to be suffering a noticeable loss of relevance as an investment asset.
The trend analysts observe is that investors are increasingly using gold as a hedge against equity risk, displacing long-term Treasury bonds. “This shift reflects a structural collapse in the traditional relationship between equities and fixed income: since 2022, correlations have remained close to zero, which has eroded the effectiveness of bonds as a diversifier. Historically, duration exposure cushioned declines in risk assets. However, recent episodes, such as the drop after Liberation Day, where equities and long-term bonds were sold simultaneously, have undermined confidence in bonds as a reliable hedge,” notes Lale Akoner, Global Market Analyst at eToro.
Flows show that investors are allocating to equities and gold simultaneously, while reducing exposure to long-term bonds. For Akoner, this trend reflects more than just inflation hedging and a reallocation in portfolio risk management. “If the correlation between bonds and stocks remains unstable, gold’s role as a volatility buffer could solidify, redefining how portfolios hedge downside risk across the cycle,” she explains.
The Loss of the Throne
Since the mid-1990s, bonds issued by the U.S. government have become the world’s most widely used reserve asset, dethroning the one that had reigned until then: gold. As Enguerrand Artaz, strategist at La Financière de l’Échiquier, explains, paradoxically, that crown they held was largely thanks to Europe. “While U.S. debt gradually gained presence in reserve assets, gold’s share quickly declined and European central banks sold their gold reserves to prepare for the advent of the euro. Thus, the yellow metal fell from 60% of global reserves in the early 1980s to 10% in the early 2000s. In parallel, U.S. Treasury bonds rose from 10% to 30%. These levels remained generally stable for two decades. However, the situation has reversed again. In fact, after overtaking the euro in 2024, gold has once again surpassed U.S. debt in global reserves since September 2025,” says Artaz.
In his view, this shift is explained by two underlying dynamics. The first is the gradual erosion of the volume of U.S. debt held by foreign investors since the mid-2010s. And the other ongoing dynamic is the strong increase in gold purchases since 2022 amid greater geopolitical uncertainty driven by the conflict between Russia and Ukraine.
The expert believes there are good reasons for these two dynamics to continue: “The return of geopolitical conflicts and a gradual but powerful trend toward the regionalization of the world favor the use of gold as a reserve asset: gold is not directly dependent on a state and is virtually the only asset capable of absorbing the flows leaving U.S. bonds.”
One data point that helps contextualize this reflection is that the gold and U.S. debt markets are of comparable size, around 25 and 30 trillion dollars, respectively, and far larger than other asset classes. According to the analysis by the LFDE expert, “this phenomenon has accelerated in recent months in parallel with the sharp increase in the price of gold (139% since the end of 2023), but also structurally: the aggressive trade policy of the Trump Administration has heightened the propensity of central banks and investors to abandon the dollar as the preferred safe-haven asset.”
In a final reflection, Artaz points out that doubts about the “health of U.S. public finances” and increased disaffection with U.S. debt could cause the dollar to lose its status as a reserve currency. “There’s only one step left, but it would not be wise to take it. Adding all instruments together, the dollar remains the world’s primary reserve asset and, even if gold dethroned it, it would still be a reference. On the other hand, the U.S. debt market, which is 30% held by investors outside the U.S., could become a geopolitical battleground. That would allow gold to continue to shine,” he concludes.
Outside the Geopolitical Battle
Artaz’s conclusion deserves a few lines: could large holders of U.S. debt end up using their bonds as a “weapon”? For example, it caught the attention of the investment community that last week, two Danish pension funds and one Swedish fund announced they were actively selling U.S. bonds.
Moreover, it’s worth remembering that China, in particular, has reduced its purchases of U.S. bonds by nearly 40% since 2013. This move has been replicated by several central banks in Southeast Asia, increasingly inclined to align with the Chinese yuan rather than the dollar on the monetary front. In contrast, Japan, which remains the largest foreign holder, has maintained the absolute value of its portfolio, but the percentage has dropped sharply, from 10% of total U.S. negotiable debt in 2010 to less than 5% today. Meanwhile, other developed countries have globally maintained their percentages but without increasing them, and only the United Kingdom has effectively increased its investments in U.S. debt.
It is inappropriate to assert that these movements are driven by geopolitical intent, but we can indeed analyze the likelihood of such a scenario. For example, Eiko Sievert, director of public and sovereign sector ratings at Scope Ratings, considers it unlikely for the EU. “The possible sale and rebalancing of reserves into other currencies or assets would be gradual and unlikely to result from a legislative act or moral suasion by EU authorities in response to Trump’s retaliations. Moreover, private investors will be very careful not to harm the value of their portfolios, which could occur if large amounts of U.S. debt were sold in a short period,” he explains.
According to Sievert’s analysis, such a sale of assets would also entail risks to a greater or lesser extent, depending on the pace and scale of the sale. And given the interdependence, unless those selling U.S. debt purchase EU or member state debt, there would be a contagion effect on EU spreads as well. “The implications could be far-reaching, as reduced demand for the U.S. dollar could also lead to a strengthening of the euro, which could weaken economic growth in EU member states focused on exports. In fact, on a global level, a massive sell-off would likely generate volatility, widen spreads, and affect the money market, with possible implications for global liquidity, potentially prompting intervention by monetary authorities,” he concludes, describing a scenario that remains quite distant.
Unlike in previous years, currency markets in 2025 were largely driven by geopolitics, and following a wave of new political developments in the early days of 2026, that trend appears likely to continue. According to experts, this is particularly true for the U.S. dollar.
In fact, the greenback has weakened notably over the past week: the DXY index has fallen by approximately 2%, and the euro/dollar exchange rate is now trading below the firm’s three-month forecast of 1.18. Analysts explain that this has happened despite a solid growth outlook in the U.S. and expectations that the next Fed rate cut won’t arrive until June.
“The recent weakness of the dollar seems to be largely driven by inconsistencies in U.S. foreign and domestic policy, which have undermined investor confidence. As a result, narratives around currency devaluation have resurfaced, pushing the dollar lower even in the absence of macroeconomic catalysts. Although it has weakened, it remains significantly overvalued. That’s why we continue to expect further declines as its interest rate advantage narrows,” says David A. Meier, economist at Julius Baer.
That said, not all analyses place the full weight of the dollar’s decline on geopolitics. In the view of Jack Janasiewicz, portfolio manager at Natixis IM Solutions, the recent drop in the U.S. dollar stems from moves in the Japanese yen, following weekend speculation about potential Fed intervention in the USD/JPY exchange rate. However, beyond these technical factors, he acknowledges that “the tensions over Greenland have weakened confidence in the U.S. dollar, which is why we’re seeing it hit recent lows again.”
A Trend Since 2025
Last year, the dollar’s decline was concentrated mainly in the first half of 2025, following President Trump’s announcement of reciprocal tariffs in April, marking a significant escalation in his global trade war.
“The dollar’s depreciation largely reflected a sharp rise in currency hedging on expectations of a weaker dollar. European currencies posted double-digit gains as the ‘sell America’ market narrative took hold in the second quarter of 2025, prompting a rotation into European assets. Precious metals were the main beneficiaries of the uncertain political backdrop in 2025, with gold rising 65% and silver surging by a spectacular 145%,” recalls Claudio Wewel, FX strategist at J. Safra Sarasin Sustainable AM.
Looking ahead to this year, Wewel believes that the weight of geopolitics and decisions by the Trump administration will continue to influence the dollar’s performance, and he anticipates a bearish trend for 2026. “The currency remains overvalued by historical standards. We see this argument as particularly relevant in the current political environment. Structural demand for the dollar should decline if the U.S. continues to pursue predatory policies, which would also justify lower fair-value exchange rates compared to the past,” he emphasizes.
He adds another nuance to his outlook: “In 2026, we also expect support for the dollar to weaken from a relative cyclical perspective. Economic growth should converge more between the U.S. and the eurozone, as the European economy benefits from the disbursement of the German fiscal package.”
Threats to Its Status
So far this month, the dollar index (DXY) has dropped approximately 1.5%, reaching its lowest level since September 18. Based on its performance yesterday, in line with this trend, some analysts conclude that the market is rotating positions, rather than turning to the dollar as a safe haven, investors are now seeking other assets. Despite this, experts do not believe the dollar will lose its status as a reserve currency or safe-haven asset.
“The book Smart Money, by Brunello Rosa, argues that the main threat to the dollar comes from China’s global expansion. Through policies such as the Belt and Road Initiative and the development of Beijing’s central bank digital currency (CBDC), China is slowly increasing the use of the renminbi in global trade payments. Control over global supply chains and raw materials goes hand in hand with global monetary hegemony. There is still a long way to go before the dollar’s reserve currency status faces a terminal threat,” says Chris Iggo, chief investment officer (CIO) at AXA IM Core, BNP Paribas Asset Management.
However, Iggo does acknowledge that the growing use of CBDCs, along with a more bipolar global balance of power, poses a threat. “Having influence over a larger share of the world’s oil supply is a counterbalance to these risks, as is maintaining strategic relationships with major oil producers, particularly Saudi Arabia. But there are also risks to the dollar beyond geopolitics: the deterioration of the U.S. fiscal position, potential political interference in monetary policy, and the possibility that global investors will respond to political and economic uncertainty by reducing their dollar allocations in global portfolios. The rise in gold, silver, and platinum prices in dollar terms likely reflects both geopolitical risks and concerns related to U.S. economic policy. For the United States, the biggest threat is that declining confidence in the dollar could increase the cost of financing its twin deficits. Higher Treasury yields would be bad news for an equity market already trading at very high valuations,” he concludes.
Photo courtesyMiguel Ángel Sánchez Lozano, interim global CEO of Santander AM.
In place of Samantha Ricciardi, who will officially leave the firm this Friday, the asset manager has appointed Miguel Ángel Sánchez Lozano as interim global CEO. According to an internal statement, he will take on these responsibilities alongside his current role as head of distribution for the Santander network at Santander Asset Management (SAM).
With this appointment, the firm re-establishes visible leadership following the announcement of Samantha Ricciardi’s departure. The move comes as the bank has just completed the integration of its two asset managers, Santander Asset Management and Santander Private Banking Gestión, creating a single entity with approximately €127 billion in assets under management.
A Homegrown Professional
Sánchez Lozano joined the SAM Group in January 2019 as CEO of Santander Asset Management and Santander Pensiones in Spain. Prior to this, he held various roles within Grupo Santander. Before taking on his role at SAM Spain, he served as head of investment product distribution at Santander Corporate and Investment Banking. In 2013, he joined Grupo Santander as head of treasury product distribution (FX & FI and RSP) at Santander Global Corporate Banking.
Before joining Santander, he was deputy general manager at Banesto, where he was responsible for treasury product distribution. Earlier at Banesto, he also served as head of investment products. Miguel Ángel began his professional career at Banesto in 1996, where he held roles in FX & equity trading and structuring.
He holds a degree in economics from CEU Luis Vives, and two postgraduate qualifications: a General Management Program from IESE and a master’s degree in financial markets from CEU. He has also completed the Advanced Specialization Program in Options and Financial Futures from the Options and Futures Institute and a behavioral finance program from the Chicago Booth School of Economics.
The 2026 edition of the Davos Forum closed with images, speeches, and agreements that help shape the new global order in which investors and asset managers will have to navigate. “This is a time of uncertainty, but also of possibility; it is not a time to pull back, but to lean in. The World Economic Forum is not about reacting to the moment. It is about creating the right conditions for us to move forward,” stated Børge Brende, President and CEO of the World Economic Forum, at the closing of the event.
In this context, and during his speech, Larry Fink, Interim Co-Chair of the World Economic Forum and CEO of BlackRock, argued that economic progress must be shared. “We believe prosperity needs to go further than it has gone, and we believe institutions like the World Economic Forum remain important to make that happen,” he stated.
Indeed, the theme of this edition, which emphasized dialogue, appeared to have tempered the tone of U.S. President Donald Trump. “He claimed to have held constructive talks on Greenland with the NATO Secretary General and canceled the planned tariff hikes set for February 1. At the same time, a meeting between the United States, Ukraine, and Russia was scheduled to address peace in Ukraine, a signal of geopolitical de-escalation that helped risk assets rebound. Gold pulled back but approached the $5,000 mark again this week,” summarized Edmond de Rothschild Asset Management.
Beyond the speeches and broader goals of Davos, markets experienced a week marked by geopolitical noise and volatility, yet equity indexes barely corrected as corporate earnings continued to support valuations. In response to these risks and uncertainty, investors moved toward safe-haven assets, particularly gold. But what are the key messages from Davos that truly matter for the industry?
Fragmentation, Risk, and Geopolitics
According to investment firms, a context of growing fragmentation and geoeconomic conflict has become increasingly evident, seen in trade, sanctions, and supply chains. In this sense, the Davos agreement on Greenland is a clear example of this fracture.
“Investors continue to seek protection for their portfolios, as tensions in global alliances and unresolved risks keep uncertainty levels high. With central banks increasing their gold purchases over the past year and a macroeconomic environment that continues to support accumulation of the asset, we foresee further price gains,” stated Mark Haefele, Chief Investment Officer at UBS Global Wealth Management.
For Thomas Mucha, Geopolitical Strategist at Wellington Management, geopolitical cycles tend to be long, historically lasting between 80 and 100 years. “Structural changes like the ones we are witnessing occur only once per century and tend to be disruptive. Therefore, while market risk is structurally higher in this new regime, 2026 will still offer ongoing opportunities to identify winners and losers within portfolios,” he noted.
Given the high probability that this shift toward national security will persist for years, Mucha believes 2026 could be a good moment to increase exposure to long-term investment themes across both public and private markets. “These themes include: defense and military tech innovation (e.g., artificial intelligence, space and aerospace technologies); critical minerals and rare earths; biotechnology; cyber defense; and renewable energy and climate resilience strategies. This dynamic plays out regionally, nationally, by sector, and at the company level, as well as across all asset classes. It naturally favors active management, as it allows for more agile risk mitigation and differentiation than a passive approach. Opportunities for alpha could emerge through long/short and other alternative strategies. In any case, prudent investors should incorporate geopolitical perspective into their portfolio strategy for 2026 and beyond,” the expert emphasized.
Focus on AI
Another major theme was artificial intelligence, which was present in most of the leaders’ discussions. In Davos, a repeated idea was that the core challenges are trust, governance, and alignment, while warnings were issued regarding job displacement and uneven distribution of productivity gains. The narrative is shifting from “adopt AI” to “prove value and control.”
For asset managers, approaching opportunities in AI goes beyond the spotlight on the Magnificent Seven. “The expansion of AI infrastructure, increased defense spending, and strong demand in the aerospace industry are creating structural tailwinds for the sector. On top of that, greater AI adoption in industrial processes is already showing improvements in productivity and operational efficiency. Looking ahead to 2026, a more favorable macroeconomic environment could boost cyclical segments of the sector and broaden opportunities beyond the large tech firms,” stated Principal Asset Management.
Echoing Davos sentiments, AI-related infrastructure is considered a solid opportunity for investors. “The growing infrastructure needs associated with AI, particularly the construction of data centers, are creating investment opportunities beyond the tech sector. Industrial companies in construction and engineering, electrical equipment, and construction machinery (making up roughly 22% of the sector) supply key components for data centers, from electrical design to cooling systems and battery storage. Some estimates suggest global investment in data centers could reach $7 trillion by 2030 to meet rising energy demands, largely driven by AI workloads,” noted Principal AM.
Sustainable Innovation
As concluded at the Davos Forum, AI and emerging technologies are fundamentally transforming all industrial sectors and the global labor market, driving profound changes in skill requirements and entire professions across both advanced and emerging economies. “When a proven technology like AI merges with emerging fields such as quantum computing or synthetic biology, ideas move from lab to market faster, shaping how industries grow and unlocking new ways to improve the world around us,” they noted. “I would advocate for developing countries: build your infrastructure, engage with AI, and recognize that AI is likely to close the technology gap,” said Jensen Huang, founder, president, and CEO of Nvidia.
The Forum advocated for the responsible and equitable use of technologies like AI, stressing the need to balance their potential with associated risks. Industry leaders encouraged peers to draw lessons from history to guide the deployment of AI. To meet future energy needs, it was emphasized that technology must scale, grids must be modernized, and access to innovation must expand. A new report on clean fuels suggests that global investment in clean fuels could rise from around $25 billion today to over $100 billion annually by 2030, driven by new demand and government ambitions.
New corporate move in the industry. Janus Henderson has signed a definitive agreement to acquire 100% of Richard Bernstein Advisors (RBA), a research-driven multi-asset macro investment manager. According to the firm, the acquisition positions Janus Henderson as a leading provider of model portfolios and separately managed accounts (SMAs). The transaction is expected to close in the second quarter of 2026.
Founded in 2009 by Richard Bernstein and headquartered in New York City, RBA is an asset manager focused on longer-term investment strategies that combine top-down macroeconomic analysis with portfolio construction based on quantitative models, and oversees approximately 20 billion dollars in client assets.
“Widely recognized as an expert and thought leader in style investing and asset allocation, Richard Bernstein has over 40 years of experience on Wall Street, including as Chief Investment Strategist at Merrill Lynch & Co.,” the firm states.
RBA offers its clients differentiated asset allocation solutions supported by the firm’s intellectual capital.
As part of the transaction, Richard Bernstein will join Janus Henderson as Global Head of Macro & Customized Investing, and will sign a multi-year agreement with the Company to lead the next phase of growth for RBA.
Key points of the deal
This acquisition will allow Janus Henderson to significantly strengthen its position in model portfolios and SMAs. Upon completion of the transaction, Janus Henderson will be among the top 10 model portfolio providers in North America, placing it at the forefront of a segment with strong growth prospects. In addition, RBA’s broad experience in distributing model portfolios and SMAs will allow Janus Henderson to enhance its distribution capabilities, including those targeting wirehouses and Registered Investment Advisors (RIAs).
“As demand for model portfolios and SMAs continues to accelerate across the industry, we are very pleased to announce this strategic acquisition of RBA, which will allow us to expand our investment capabilities for our clients, enhancing our current offerings in model portfolios and SMAs. Richard and his investment team are recognized for their research expertise, proven investment strategies, and innovative top-down macro approach. We believe that the investment and distribution capabilities of both RBA and Janus Henderson are a winning combination and position Janus Henderson for long-term success and market leadership in model portfolios and SMAs,” said Ali Dibadj, CEO of Janus Henderson.
For his part, Richard Bernstein, CEO and CIO of Richard Bernstein Advisors, added: “We are thrilled to join Janus Henderson in this new stage of RBA’s evolution. Our shared approach, deeply rooted in research, the mindset of putting the client first, our strength in active ETFs and product innovation, as well as our distribution capabilities, will allow us to develop customized models and expand our reach among clients. We will remain committed to offering our clients our industry-leading intellectual capital and market perspectives. Our macro investment approach will complement Janus Henderson’s bottom-up fundamental investment strategies, expanding our combined capabilities for the benefit of our clients.”
iMGP sells its stake to Janus Henderson
In parallel with this transaction, iM Global Partner (iMGP) has announced that it will sell its stake in Richard Bernstein Advisors (RBA) to Janus Henderson, as part of the acquisition of 100% of RBA. Following this announcement, Philippe Couvrecelle, Founder and CEO of iM Global Partner, stated: “Our mission has always been clear: to identify top boutique managers, partner with them to grow, and offer high-quality investment solutions to clients around the world. The acquisition of RBA by Janus Henderson is a very positive outcome for the firm and for clients, and a clear proof of our strength in identifying leading investment boutiques, as well as the value our partnership platform can create for our asset manager partners.”
Couvrecelle emphasized that iM Global Partner is a growing company. “We already have ambitious plans to accelerate our long-term expansion, and this transaction provides additional momentum to capitalize on our expertise in partner selection, forge new relationships, and further advance our growth strategy in Europe, the United States, and Asia,” he added.
For his part, Richard Bernstein, CEO and CIO of the firm, noted that iM Global Partner has been an excellent and highly supportive partner for RBA over the past five years. “Everyone at RBA is deeply grateful for iMGP’s help in driving our growth, and we wish them the greatest success in their future projects,” he said.
After taking some distance from the first weeks of January, experts agree that the arrest of Nicolás Maduro by the United States has had a significant geopolitical and financial impact. Although the focus remains on the oil and gold markets, some firms are also observing possible consequences for Latin American fixed income markets.
“The U.S. operation in Venezuela marks a decisive moment for Latin America, with implications for fixed income investors. While the possibility of increased U.S. intervention introduces new risks, it also creates opportunities by potentially becoming a source of reduced political risk premiums. Our base case is that greater U.S. engagement will support reform momentum in Colombia, Brazil, and Mexico, strengthening the fundamentals in favor of local LatAm bonds,” say analysts at JP Morgan AM.
According to the asset manager’s view, for fixed income investors, these events are a double-edged sword. “On the one hand, increased U.S. engagement leading to more orthodox governments from an economic standpoint could accelerate reform momentum in some countries, improving governance and fiscal discipline. On the other hand, the risk of political backlash or unintended consequences remains high, especially in markets with fragile institutions or entrenched political movements. Even so, we believe the fundamental case for increasing exposure to certain Latin American bonds has strengthened. Countries likely to benefit from U.S. support, or where reform prospects improve, should see a reduction in risk premiums, while those more exposed to economic policy uncertainty could continue to lag behind other emerging market regions,” they add from JP Morgan AM.
Implication for Investors
Historically, as Salman Ahmed, Head of Global Macro and Strategic Asset Allocation at Fidelity International, recalls, when extreme risks, such as a prolonged conflict, dissipate, sovereign debt in default or under stress in emerging markets tends to rebound on expectations of regime change, sanctions relief, and eventual restructuring. Therefore, he sees it likely that “a similar pattern will occur this time, with early signs that the regime is willing to cooperate with the United States, which could further boost bond prices.”
One must not forget the specific characteristics of the Latin American debt market. Michael Strobaek, Global Chief Investment Officer at Lombard Odier, explains that while emerging market equity indices are largely dominated by China, dollar-denominated bond indices include a greater proportion of Latin American debt securities. Therefore, he expects, following the arrest of Maduro, “a greater compression of spreads in emerging market bonds, as the growth of these economies remains supported while short-term U.S. yields continue to decline.”
However, not all Latin American debt would move in unison in the face of this new geopolitical shock. In this regard, Mirabaud makes it clear that in emerging debt, the current situation in Venezuela will bring “greater differentiation between countries with solid fundamentals and extreme idiosyncratic situations.” Specifically, Venezuela’s sovereign and quasi-sovereign debt “remains in default,” the firm notes, stating that the profile of this asset “remains problematic and dependent on events.” In addition to being subject “to a clearly defined political and legal process.” The firm also refers to Colombian debt, “indirectly exposed due to its geographic proximity.” Here, the firm considers it “possible” that short-term volatility will occur, “without this posing an immediate challenge to its strong macro-financial fundamentals.”
But there is the possibility of Venezuela’s return to international debt markets. If it happens, Christian Schulz, Chief Economist at Allianz GI, states that it is possible that “sovereign spreads of neighboring countries could narrow as stability improves.” He also believes that distressed debt investors may find opportunities in bonds issued by the Venezuelan state or by Petróleos de Venezuela (PDVSA). Alex Veroude, Head of Fixed Income at Janus Henderson, expresses a similar view, stating that in the short term, “Venezuelan bonds could receive initial support, as markets price in the prospect of policy normalization.”
Less External Influence
According to Capital Group, it is important to remember that emerging market debt denominated in local currency is increasingly determined by domestic interest rates, reflecting structural changes taking place in the composition of markets and policy frameworks. “The lower participation of foreign investors has reduced external influence, allowing the monetary policy of the respective countries to play a dominant role in price setting. This trend shift has been supported by monetary and fiscal credibility, the greater depth of capital markets, and the rise of institutional investment, which provides stable demand even in markets that previously relied heavily on foreign financing,” they explain.
Currently, central banks in many emerging markets are already well advanced in their respective rate-cutting cycles and, although a slowdown in the pace of cuts is expected in 2026, the cycle is not yet over, and the room for further cuts will vary significantly between regions. “The yield premium offered by local currency emerging market debt remains attractive, which can provide protection against bouts of volatility and an appealing level of income even in a context of declining global yields. Investor exposure to local currency emerging market debt has been steadily recovering after several years of capital outflows, supported by improved fundamentals and the attractive level of real yield. Nonetheless, it remains below pre-pandemic levels, creating a favorable technical backdrop for the asset class. Emerging market currencies could also contribute to returns, as some benefit from high U.S. dollar valuations and the narrowing of yield advantages,” they explain from Capital Group.
No Peruvian president has completed a full term since 2016. The last to do so was Ollanta Humala, who was later sentenced to 15 years in prison for aggravated money laundering. What followed was a decade marked by seven failed presidencies, characterized by ineffective leadership, corruption, bribery, impeachments, resignations, and an attempted coup.
A Total of 34 Presidential Candidates
That same instability now dominates the electoral landscape. Peru’s upcoming general elections, scheduled for April 12, 2026, feature a record number of presidential candidates, with 34 officially registered, up from 18 in the 2021 elections.
The candidates span the entire political spectrum, from the far left, left, center, right, and far right, including populists and traditionalists, as well as establishment figures and high-profile outsiders such as a comedian and a former footballer who also served as a mayor.
On the left, candidates include figures linked to Perú Libre and Marxist platforms. Vladimir Cerrón remains a prominent far-left figure, though his legal troubles limit his candidacy, while Ronald Atencio is emerging as a notable alternative.
Centrist candidates range from moderate reformers to established political figures. Mario Vizcarra, brother of former president Martín Vizcarra, positions himself as a moderate reformist. Figures like Yonhy Lescano and César Acuña also hold centrist positions, as does former mayor and ex-footballer George Forsyth.
On the right, the field is broad but lacks a dominant candidate. Rafael López Aliaga, a conservative former mayor of Lima, has gained significant support through his tough stance on crime and pro-business rhetoric. Keiko Fujimori, widely known from her three previous presidential bids, remains a key figure but remains polarizing, which limits her ceiling of voter support. Other right-wing figures include journalist and television host Philip Butters, as well as security-focused conservative candidates such as Roberto Chiabra, alongside media personalities like Carlos Álvarez, who present themselves as outsiders.
However, all candidates face an electorate marked by unusually high levels of indecision. Multiple polls show a significant share of undecided voters. Surveys conducted in late 2025 and early 2026 also reveal a wide dispersion of voting intentions. Rafael López Aliaga and Vizcarra have led several polls with moderate single-digit support, while Fujimori’s standing remains below her past electoral performances.
Security Over Corruption
Although corruption remains endemic, as seen in the convictions of former officials and ongoing accusations across administrations, it no longer dominates public discourse to the same extent as economic and security concerns.
Analysts observe a shift in priorities toward public order and safety, especially in urban and peri-urban areas where crime rates have risen, including violence linked to illegal mining and gang activities. In some regions, clashes between criminals have sparked community unrest and highlighted weaknesses in law enforcement.
External influences on the election are expected to be moderate compared to other regional contests. Left-leaning governments in the hemisphere show limited direct intervention, while parties aligned with pro-market platforms may receive attention or tacit engagement from the United States and international stakeholders, mainly around investment and security cooperation.
A New Senate
To address Peru’s political fragmentation and strengthen checks and balances, a major proposal for institutional change involves transitioning from the country’s former unicameral legislature to a bicameral system that would introduce a Senate alongside the current Chamber of Deputies.
The new Senate would be made up of 60 members, half elected from territorial constituencies and the other half at the national level, requiring candidates to have appeal both locally and nationally. While the Senate would not initiate legislation, it would hold decisive power in passing laws and in resolving impeachment proceedings referred by the lower house. This bicameral structure also aims to balance power currently concentrated in executive offices and ministries.
Proponents argue the reform could curb political fragmentation by raising entry barriers through electoral thresholds and balanced regional representation, thus reducing the proliferation of micro-parties. By requiring broader national support and reinforcing legislative oversight, the bicameral system is presented as a safeguard against weak coalition governments and informal clientelist networks. However, critics warn that introducing a second chamber could lead to deadlock between the two houses, especially if political alignment diverges.
Peru’s economic outlook presents a mixed picture. On one hand, it continues to be hindered by long-standing structural weaknesses that successive governments have struggled to address. Chief among these is informality. Approximately 70% of employment remains outside the formal economy, severely limiting tax collection, curbing productivity gains, and leaving large segments of the population without access to pensions, health insurance, or unemployment protection. This informal structure also undermines the effectiveness of public policy, complicating the implementation and sustainability of fiscal and social reforms.
The pension system reflects these distortions. Coverage remains fragmented between public and private plans, and contributions are low due to widespread informal employment. Repeated withdrawals from private pension funds in recent years have further eroded long-term savings, reducing the system’s ability to provide adequate retirement income and weakening domestic capital markets. Although reform proposals surface periodically, political instability has repeatedly stalled meaningful implementation, leaving most structural vulnerabilities intact.
Despite ongoing internal constraints and political fragility, Peru’s economic performance has been relatively strong. Despite frequent leadership changes, the country has maintained macroeconomic discipline for nearly two decades. Fiscal policy has remained conservative, and institutional continuity at the central bank has shielded monetary policy from short-term political pressure.
Peru’s public debt stands at about 32% of GDP, well below the levels seen in major OECD economies. By comparison, U.S. debt exceeds 120% of GDP, while Germany, often viewed as a model of fiscal discipline, stands above 60%. After widening during the pandemic and peaking above 3.5% of GDP in 2024, Peru’s fiscal deficit has narrowed and is expected to approach official targets in 2025 and 2026, adjusting faster than in many advanced economies where high deficits have become entrenched.
Inflation management is another area where Peru stands out. Price pressures have largely remained within the central bank’s target range, thanks to credible monetary policy and a stable monetary framework. This contrasts with prolonged inflation episodes recently seen in the U.S. and parts of Europe, where central banks were forced to adopt aggressive tightening cycles with uneven growth outcomes.
Growth prospects, while modest, are also relatively stable. GDP is expected to grow between 3% and 3.5%, driven by mining investment, infrastructure projects, and steady export demand. This pace outstrips projected growth in Germany and is comparable, or slightly stronger, than medium-term forecasts for the U.S., despite Peru’s significantly higher political uncertainty. High commodity prices and a strong mining investment pipeline continue to anchor external growth, while private investment remains sensitive to electoral outcomes.
As Peru approaches the 2026 elections with a record number of presidential candidates and a fragmented party system, the picture reflects deep institutional fatigue and a growing recognition that the status quo is untenable. Political volatility has eroded governance and public trust, driving voter concerns around security, stability, and accountability. The proposal to reintroduce a Senate offers a potential path toward gradual correction, by raising the standard of representation, reducing fragmentation, and strengthening legislative oversight. Persistent challenges such as informality and pension system shortcomings remain unresolved, but the country’s ability to preserve macroeconomic stability despite repeated political crises suggests a stronger foundation than the political cycle alone might indicate.
The debate is no longer whether securitization is a valid tool, but which asset managers are prepared to use it in a world that has changed its rules. The current environment, marked by structurally higher interest rates, persistent geopolitical tensions, and a much more demanding investor, is penalizing asset managers who continue trying to scale strategies with outdated structures.
Today, the biggest mistake an asset manager can make isn’t being wrong about an investment thesis but insisting on formats that no longer match the market’s reality. The message from the latest Morningstar 2026 Global Outlook is clear: uncertainty is not a one-time event; it’s the new starting point.
In this context, generating a good investment idea is not enough. If that strategy cannot be distributed efficiently, provide liquidity, meet institutional standards, and adapt to various regulatory frameworks, it simply becomes uncompetitive. This is where securitization stops being a technical solution and becomes a strategic advantage.
For asset managers, securitizing means separating alpha from operational friction. It allows converting both liquid and illiquid strategies into listed, tradable, and transparent vehicles. In an environment of recurring volatility, access to intraday liquidity and secondary markets is no longer a “value-added”: it’s a basic requirement.
The reality is uncomfortable for many traditional managers. Institutional investors and private banks are no longer willing to take on illiquid structures, manual processes, or vehicles that are difficult to explain to regulators. They seek products with ISINs, clear valuations, broker access, and a robust governance framework. Securitization precisely meets this demand.
Morningstar also warns that many supposedly “diversified” portfolios are actually exposed to the same risks: extreme concentration, demanding valuations, and liquidity dependent on sentiment. Meanwhile, private assets continue to grow, but their access is still limited by operational friction, high costs, and opaque structures. As the report points out, the problem is not the asset: it’s the format.
This is where securitization stops being a technical tool and becomes a strategic decision. Transforming liquid or alternative assets into listed, liquid vehicles with institutional standards allows asset managers to meet three key demands of today’s market: flexibility, risk control, and global access.
According to The Business Research Company, the global market for asset-backed securities surpassed USD 2.4 trillion in 2024 and is projected to continue growing at an annual rate of 6% in the coming years. Beyond the size, this data reflects a structural shift in institutional capital toward securitized instruments in response to the need for more stable income, real diversification, and more efficient structures in an interest rate volatility environment.
This growth is not a search for yield, but a shift in priorities. For many asset managers, securitized strategies provide access to cash flows tied to the real economy, with less reliance on individual issuers and a better ability to manage duration, credit risk, and liquidity compared to traditional fixed-income alternatives. In this regard, Janus Henderson has pointed out that securitized assets are gaining weight in institutional portfolios for their ability to offer recurring income and greater resilience in scenarios of high-interest rate volatility, relying on diversified portfolios of thousands of underlying assets.
Ignoring this reality comes at a cost. Investors, increasingly informed and sensitive to liquidity and governance, are no longer willing to accept difficult-to-explain structures. They seek products with clear valuations, secondary market trading, and robust regulatory frameworks.
In this scenario, FlexFunds positions itself as a strategic partner for asset managers who want to stay relevant. Its model allows asset managers to repackage assets into listed vehicles (ETPs), ready for global distribution, without the manager needing to become a legal, operational, or regulatory expert. The focus returns to where it should be: portfolio management.
This approach is complemented by integration with solutions like Leverage Shares, a leader in leveraged ETPs in Europe, and Themes ETFs, a specialist in thematic ETFs in the United States, reflecting where the market is heading: liquid, listed vehicles designed to capture opportunities in an agile manner.
The conclusion is clear. From 2026 onward, the question won’t be who has the best investment idea, but who structured it to survive in an environment where uncertainty is no longer the exception, but the norm. Securitization is not a trend: it’s the new standard, and asset managers who don’t integrate it into their business model won’t be defending their identity: they’ll be giving up their future.
If you want to explore how to scale investment strategies in today’s environment, contact the FlexFunds expert team at info@flexfunds.com and discover how to repackage multiple asset classes into listed, liquid, and globally distributable vehicles.
Capital Group has appointed Patricia Hidalgo as Managing Director and Head of Latin America to lead its distribution efforts in the region. Based in the firm’s New York office, Hidalgo will report to Mario Gonzalez, Head of the Client Group for Spain, US Offshore, and Latin America.
According to the company, in this role, Hidalgo will help drive the firm’s strategy to expand and deepen relationships with institutional investors and distributors across the region, including pension fund managers in Mexico, Chile, and Colombia, as well as central banks and sovereign wealth funds.
With extensive experience in the region, Hidalgo joins Capital Group from J.P. Morgan Asset Management, where she spent over a decade in various roles, most recently as Head of Alternatives for Latin America. Prior to that, she worked at CitiBanamex in Mexico. A native of Spain, Patricia has lived and worked in Madrid, London, Hong Kong, Mexico City, and New York, bringing a truly global perspective to her new role.
Following the announcement, Mario Gonzalez, Head of the Client Group for Spain, US Offshore, and Latin America at Capital Group, stated: “We are pleased to welcome Patricia to Capital Group. Her deep knowledge of the Latin American market and proven ability to build lasting client relationships will be key as we expand in this high-growth region. This appointment reinforces our commitment to working closely with clients and delivering time-tested, long-term investment strategies and solutions tailored to their needs across Latin America.”
For her part, Patricia Hidalgo, Managing Director for Latin America at Capital Group, commented: “I am delighted to join Capital Group and lead our growth in Latin America. The region offers tremendous opportunities to build lasting partnerships, and I look forward to working with the team to bring Capital Group’s world-class investment expertise and long-term solutions to clients across Latin America.”
