What If Traditional Diversification Were No Longer Enough?

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For decades, portfolio construction rested on a relatively simple premise: combining stocks and bonds could balance risk and return. However, events in recent years have put that logic to the test.

Persistent inflation, geopolitical tensions, shifts in monetary policy, and growing market concentration have led many managers to reconsider a fundamental question: what does it really mean to be diversified in 2026?

This was precisely one of the main conclusions recently addressed by Morningstar in its research on diversification. The firm maintains that diversification remains one of the most effective tools for managing risk, but warns that relationships between different asset classes have evolved, forcing managers to revisit some of the traditional premises of portfolio construction.

The challenge of correlations

One of the most relevant aspects highlighted by recent Morningstar studies is that true diversification does not depend solely on the number of assets in a portfolio, but on how they behave in relation to each other.

In other words, holding more assets does not necessarily result in a more resilient portfolio if they all react in a similar way to the same macroeconomic factors.

The evolution of the correlation between stocks and bonds provides a particularly relevant insight for managers. While many market participants consider a negative correlation between these two asset classes to be the norm, the data reveals a more complex reality. Over the last 51 years, stocks and bonds recorded positive correlation in 67% of calendar years.

Annual correlation between stocks and bonds (1975-2025)

Source: Bloomberg. Equities represented by the S&P 500 and bonds by the Bloomberg US Treasury Total Return Index. Chart presented by Maricarmen de Mateo, Head of Alternatives Distribution at Vinci Compass, during the webinar “Tendencias, desafíos y herramientas que están redefiniendo la gestión de activos en 2026”, organized by FlexFunds and Funds Society.

 

The prolonged period of negative correlation observed from the early 2000s through 2021 coincided with an environment characterized by moderate inflation, globalization, and declining interest rates. However, the return of inflationary pressures, combined with a more complex geopolitical landscape and rates that could remain higher for longer, has once again driven positive correlations between both asset classes.

For managers, the message is clear: asset relationships are not permanent. The effectiveness of a diversification strategy depends, to a large extent, on the prevailing economic regime and the ability to identify risk and return sources that respond to different dynamics.

This reality has led many managers to reassess the composition of their portfolios and seek new exposure sources to complement traditional equity and fixed income strategies.

From asset diversification to risk-source diversification

Historically, diversification was understood as an allocation across different traditional asset classes: equities, fixed income, cash, and even international exposure.

Today, an increasing number of professionals are adopting a different approach: diversifying by risk sources.

Under this approach, the goal is no longer simply to add more positions, but to incorporate exposures that respond to different economic dynamics, whether through specialized fixed income strategies, private credit, infrastructure, trade finance, real estate assets, commodities, or certain alternative strategies.

The Nuveen EQuilibrium Global Institutional Investor Survey 2026, based on responses from 800 institutional investors managing USD 16.6 trillion in assets, shows that private markets continue to gain prominence within global portfolios.

One of the most revealing data points is that the percentage of institutions with more than 20% allocation to private markets is projected to rise from 29% currently to 51% over the next five years.

Expected evolution of allocations to private markets

Source: Nuveen EQuilibrium Global Institutional Investor Survey 2026.

While the search for returns remains a relevant factor, this evolution also reflects institutional investors’ interest in incorporating assets with differentiated behavior relative to traditional public markets.

Securitization as a bridge to new exposures

As managers expand the universe of exposures used to diversify their portfolios, the need for efficient structures to access, package, and distribute those strategies also grows. In this context, securitization is taking on renewed relevance.

Beyond its traditional role as a financing tool, securitization makes it possible to transform different strategies and assets into structured, distributable investment vehicles within the international financial infrastructure.

Its value lies in expanding the universe of exposures that managers, advisors, and institutions can efficiently incorporate into their portfolios.

This encompasses both liquid and illiquid assets: from global equity, fixed income, active management, thematic, or multi-asset strategies, to exposures tied to infrastructure, real estate projects, or specialized financing.

The ability to structure these strategies under investment vehicles with institutional operational and distribution standards facilitates access to return sources that, in many cases, would be more complex to implement through traditional structures.

In an environment where managers seek to combine operational efficiency, global access, and greater risk diversification, securitization is establishing itself as a tool capable of connecting an increasingly broad range of assets and strategies with institutional investors and international distribution platforms.

Diversify better, not necessarily more

The current evolution of markets seems to be driving a transition from quantitative diversification toward qualitative diversification.

The goal is not to add more assets to a portfolio, but to identify those that genuinely contribute differentiated behavior across different economic cycles.

The diversification discussion no longer revolves exclusively around how many assets to include, but around understanding which risks are present in a portfolio and which remain uncovered.

In that context, securitization should not be understood solely as a financial structuring tool, but as a mechanism that enables access to new exposure sources, expanding the available set of opportunities and building portfolios that are potentially more robust in an increasingly complex environment.

Because if anything seems to have changed in recent years, it is not the importance of diversification. What is changing is the environment in which it must be built.

In a world where correlations among traditional assets can vary significantly depending on the economic regime, the ability to access a broader range of exposures, liquid and illiquid, public and private, is becoming an increasingly relevant element for building resilient portfolios.

The question for managers is no longer whether to diversify, but how to build portfolios capable of adapting to an environment where asset relationships are constantly evolving. In that challenge, expanding the available universe of exposures can be just as important as asset selection itself.

At FlexFunds we help managers, advisors, and institutions transform a wide variety of strategies and assets into internationally distributable investment vehicles. To explore how securitization can contribute to your diversification objectives, contact our specialists at info@flexfunds.com

How Have Pension Funds Changed Their Approach to Asset Allocation?

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Global pension assets have reached record highs, surpassing $68.3 trillion, but how has their asset allocation evolved? According to the Global Pension Assets Study published by the Thinking Ahead Institute (TAI) and sponsored by WTW, across the seven largest pension markets, over the past 20 years, the allocation to equities has declined by 9%, representing 48% of total assets, while allocations to bonds and other asset classes have increased by 3% and 6%, respectively, reaching 31% and 19% of total assets.

Looking specifically at last year, when pension assets exceeded $68.3 trillion, global markets delivered broad-based gains, with most major asset classes generating positive returns. “Equities performed particularly well, while fixed income also posted gains in light of global interest-rate cuts and narrowing credit spreads,” noted Jessica Gao, Director of the Thinking Ahead Institute.

Looking ahead to 2026, Gao highlights that fiscal support and AI-related investment should continue to be important drivers of growth. “Inflation trends and central bank actions will be key, particularly in the U.S., where strong capital spending and supportive fiscal policy may continue to drive growth and keep yields relatively elevated,” she added.

Change in Approach

The main conclusion of the report is that the current aggregate asset allocation more closely resembles that of 15 years ago. In addition, it argues that the Total Portfolio Approach (TPA) has reached a defining moment, as portfolios have moved beyond traditional asset-class silos. “What began as a cutting-edge concept among a small group of asset owners has entered the mainstream, supported by high-profile adopters. This shift reflects a growing recognition that managing today’s portfolios requires whole-portfolio decision-making rather than asset-class optimization, as well as organizational and portfolio resilience rather than simply managing volatility and tracking-error risks,” the report explains in its conclusions.

According to WTW, the TPA framework changes the fundamental question: “It is no longer about how an asset performs in isolation, but rather how each exposure contributes to the fund’s overall objectives, making this approach both a test of organizational maturity and an investment framework.”

In this regard, the report argues that a total portfolio perspective is better suited to the interconnected risks investors now face, including inflation, liquidity, concentration, systemic, and climate risks, all of which cut across asset classes. “TPA supports more coherent portfolio construction by clarifying the role of each exposure, the next unit of risk the fund is willing to assume, and the trade-offs among private market opportunities, liquidity, and long-term resilience. Its focus on integrated decision-making and enhanced data helps investors manage risk over time—not just short-term volatility—and promotes adaptability through scenario analysis and a broader view of risk than traditional models allow,” the report states in its conclusions.

It further argues that TPA is particularly important now because the investment environment is more uncertain, complex, and interdependent than the governance models for which many funds were originally designed. “Rapid technological change and rising political and systemic risks require frameworks that can operate with less certainty and less model stability. TPA addresses this by enabling faster and more coordinated decision-making, supported by better data, technology, and an organization-wide perspective,” the report concludes.

CME Group and Morningstar Announce Exclusive Licensing Agreement for Index Derivatives

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Morningstar has announced the signing of a multi-year licensing agreement that will allow CME Group to launch derivative products based on several of Morningstar’s flagship equity indexes, including the Morningstar US Total Market, Large Cap, Large Cap Value, Large Cap Growth, Mid Cap, and Small Cap indexes.

CME Group will offer derivatives linked to Morningstar Market Indexes for the first time, as these benchmarks undergo rebranding following the integration of CRSP. This will enable clients to access derivatives tied to indexes that serve as benchmarks for more than $3 trillion in assets.

The agreement will expand the range of investment and hedging instruments linked to some of the most widely used U.S. equity indexes. As a result, investors will gain access to tools for managing risk and taking positions across different segments of the market, from large-cap companies to mid- and small-cap stocks.

“We are delighted to collaborate with CME Group to bring derivative products linked to Morningstar Market Indexes to market for the first time. These are among the most comprehensive and representative benchmarks of the U.S. equity market,” said Amelia Furr, President of Morningstar Indexes. “Following the acquisition of CRSP earlier this year, we have become the leading provider of U.S. equity indexes, and this new relationship with CME Group will further accelerate our growth. Most excitingly, we expect to open new opportunities and bring our high-quality equity indexes to an entirely new segment of the global investment market.”

“We are pleased to partner with Morningstar to help develop next-generation risk management tools that are more precise and effective for the global investment community,” said Tim McCourt, Senior Managing Director and Global Head of Equity, FX, and Alternative Products at CME Group. “The combination of CME Group’s highly liquid equity derivatives marketplace with Morningstar’s data and index ecosystem will allow us to provide clients around the world with an enhanced framework for confidently managing market volatility and capitalizing on new investment opportunities.”

Harvey Schwartz of Carlyle: “Demand for Private Capital Will Be Extraordinary”

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Harvey Schwartz, de Carlyle
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Harvey Schwartz, CEO of The Carlyle Group, was unequivocal during Insite 2026, an event organized by BNY: the world is undergoing a structural reconfiguration of the global economy that will create unique investment opportunities, and the wealth segment will be one of its main drivers.

For Schwartz, the current moment leaves no room for half measures. “I believe this is the most important inflection point in capital formation that I have seen in my lifetime,” he stated. The argument is straightforward: the major trends that shaped finance for decades—disinflation, declining interest rates, manageable deficits, and global economic integration—have either reversed or been put on hold. The only force that continues unabated is technology.

The geopolitical backdrop is central to his analysis. Russia’s invasion of Ukraine, he argued, was “one of the most significant events of this century, perhaps of the last 50 years,” and, together with the conflict in the Middle East, it has completely reshaped government priorities. “Everywhere I go in the world—Japan, South Korea, Beijing, Central Europe—the narrative is always the same: national security, economic growth, and political stability,” he said.

But there has been a key redefinition of that concept. “Historically, national security was synonymous with defense. Now it is a much broader concept: it includes energy security and data security.” And that expansion, according to Schwartz, is precisely where private capital flows will be concentrated over the coming years.

Defense, Energy, and Other Sectors Where Carlyle Sees Opportunities

The Carlyle CEO was specific about the sectors expected to attract investment. Aerospace and defense, industrials, and healthcare top the list, all of them increasingly converging with technological advancement. “Look at all the defense investment announcements around the world: Canada, Europe, Japan. The demand is enormous,” he noted.

However, it was on energy that Schwartz made one of his strongest arguments, and where Carlyle holds a distinctive position. “We were the only major private equity firm that maintained a full energy business when energy was unpopular.” That decision, which at the time may have appeared contrary to consensus, now looks strategic: “The conversation around the world has shifted from ‘energy transition’ to ‘energy diversification,’ which is really code for: I need energy security.” Carlyle’s business in this sector ranges from traditional energy to renewables, covering the entire spectrum.

The underlying thesis is that governments cannot finance this transformation on their own. “Deficits are too large. So where will the capital come from? From banks, public markets, and private capital.” And within that trio, private markets—and the financial advisors who channel them—will play a leading role.

Wealth Management as a Driver of Private Capital

Schwartz was direct about the importance the wealth segment will have in this new cycle. “There are 43 million households in the United States that spend $15 trillion a year. That’s the size of China. All of that wealth needs to be managed by this audience,” he told the advisors in attendance.

The executive described how, upon joining Carlyle, he personally set out to listen to financial advisors before making decisions. “I went and spoke with them directly. I asked them what was important to them, about portfolio construction, what their clients needed. And I was surprised by how sophisticated they are. It bothers me when I read articles saying advisors are confused. They are not confused. They manage enormous pools of wealth, as sophisticated as my institutional client base.”

Regarding the product strategy for this segment, Schwartz emphasized diversification as the guiding principle. “You may not own the winning asset that rises 130% or 40%, but you will mitigate much of the downside risk. And as the industry evolves, you have to build the right vehicles for this audience.” The implicit warning was clear: the world is changing too quickly to bet everything on a single sector. “When I arrived at Carlyle, everyone told me the big gap was software. Three years later, nobody likes software.”

Despite the complexity of the environment, Schwartz concluded on an optimistic note. “I believe all of this can be very, very positive for markets. The marginal returns on that capital will be quite attractive over the next decade.” Geopolitical risk is difficult to quantify, he acknowledged, but it also creates inefficiencies that generate opportunities for those with the scale and sector expertise needed to navigate this environment.

Maximilian Kunkel (UBS GWM): “Family Offices Are Actively Diversifying Their Currency Risk”

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Photo courtesyMaximilian Kunkel, Chief Investment Officer, Global Family and Institutional Wealth at UBS GWM.

Sixty percent of family offices plan to modify their strategic asset allocation over the next 12 months. This is the highest percentage ever recorded in the UBS Global Family Office Report 2026 and, according to Maximilian Kunkel, Chief Investment Officer, Global Family and Institutional Wealth at UBS GWM, it reflects “both a defensive reaction to a more complex macroeconomic environment, increased geopolitical uncertainty, and concentration risk, as well as a proactive repositioning to capitalize on new megatrends, particularly artificial intelligence, as well as areas such as infrastructure and emerging markets.”

In addition, a paradigm shift is emerging in currencies: 65% of family offices expect confidence in the U.S. dollar as a reserve currency to weaken in the short term due to concerns about U.S. debt, and 47% acknowledge being overly exposed to the greenback. We spoke with Kunkel about these and other trends highlighted in the report.

Continuing with the currency theme, how is UBS advising clients to structure multi-currency frameworks without compromising the returns of the underlying assets, which are traditionally denominated in U.S. dollars?

With 65% expecting a weaker dollar and nearly half considering themselves overexposed to the currency, family offices are actively diversifying their currency risk. This involves designing multi-currency frameworks that balance diversification with return objectives. In practice, this may mean maintaining strategic allocations to currencies such as the euro and the Swiss franc, while employing hedging strategies to manage foreign exchange risk without undermining the performance of dollar-denominated assets. The goal is to enhance portfolio resilience and flexibility—not to abandon the dollar, but to ensure portfolios are prepared for a range of scenarios.

Interest in AI remains strong, but we are seeing a shift in focus from highly valued software companies toward the physical ecosystem supporting AI. For a fund selector, what is the most efficient way to capture this “second derivative” of AI? Is it time to rotate from purely technology-themed funds into global infrastructure funds?

Interest in artificial intelligence (AI) remains strong, but investors increasingly recognize that the opportunity extends beyond the technology itself and encompasses the entire value chain that supports it, including the energy and resources required for its growth. For investors, this means it is important to take an active management approach not only within the AI universe itself—software, hardware, and applications—but also across the sectors that enable its development, such as commodities, utilities, and industrials, ensuring portfolios are positioned to benefit from innovation throughout the ecosystem.

Historically, gold has represented a modest allocation within family office portfolios (around 2%). However, the 2026 report shows that the average planned allocation has risen to 3%. Are wealthy families increasingly using gold as a structural hedge against the erosion of purchasing power in traditional fiat currencies?

Beyond its role as a safe-haven asset against geopolitical risks, family offices are increasingly using gold as a structural hedge against the loss of purchasing power in fiat currencies. Concerns about rising sovereign debt levels, currency volatility, and geopolitical risks have contributed to this trend. Family offices typically view gold as a long-term store of value and a diversification tool within multi-asset portfolios.

The report highlights a striking geographic divergence: while family offices in Europe and Asia are actively seeking to reduce concentration risk in the United States by diversifying into Asia-Pacific and Western Europe, U.S. family offices have increased their domestic bias from 86% to 88%. How do you explain to a North American family office that concentrating on its domestic market may represent a dangerous concentration risk in the current geopolitical environment?

Global diversification can help mitigate risks arising from domestic disruptions, regulatory changes, or sector-specific slowdowns. It also provides access to opportunities unique to different regions. We believe the most resilient portfolios are those that successfully balance local expertise with global opportunities.

Finally, the report once again highlights a persistent challenge: governance. With the multi-trillion-dollar intergenerational wealth transfer already underway, what are the real risks for financial advisors of losing relationships with these structures if families fail to professionalize their governance today?

Despite significant progress in the institutionalization of investment processes, governance remains an area requiring greater attention. With only one-third of family offices having a defined succession plan and just 27% actively preparing the next generation, there is a risk of losing continuity, family cohesion, and long-term stability as wealth passes from one generation to the next. In the context of the Great Wealth Transfer, professionalizing governance through proactive succession planning and the involvement of younger generations is essential to preserving family wealth, ensuring smooth transitions, and maintaining the effectiveness of family office structures over time.

ECB Raises Interest Rates by 25 Basis Points Due to the Inflationary Impact of the War in the Middle East

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The Governing Council remains committed to setting monetary policy in a way that ensures inflation stabilizes at its 2% medium-term target. In line with this commitment, the Governing Council has decided to raise the ECB’s three key interest rates by 25 basis points. The war in the Middle East is generating inflationary pressures, and the decision to increase interest rates is appropriate across the various scenarios assessing the possible evolution of the shock and its impact on the euro area’s medium-term outlook.

The baseline scenario in the latest Eurosystem staff projections foresees headline inflation averaging 3.0% in 2026, 2.3% in 2027, and 2.0% in 2028. Inflation excluding energy and food is projected to average 2.5% in both 2026 and 2027, and 2.2% in 2028 under this scenario. Compared with the March projections, staff have revised upward the baseline inflation forecasts for 2026 and 2027 due to a higher projected path for energy prices, which is expected to pass through to food, goods, and services inflation to some extent.

The baseline scenario projects economic growth to average 0.8% in 2026, 1.2% in 2027, and 1.5% in 2028, implying downward revisions for 2026 and 2027 due to a more pronounced impact of the war on commodity markets, real incomes, and confidence.

The outlook remains uncertain, with upside risks to inflation and downside risks to economic growth. The full implications of the war for medium-term inflation and growth will depend on the intensity and duration of the energy price shock, as well as the magnitude of its indirect and second-round effects. This uncertainty is also reflected in the wide range of inflation and growth outcomes across the updated illustrative scenarios prepared by Eurosystem staff. These scenarios will be published alongside the staff projections on the ECB’s website.

With today’s decision, the Governing Council remains well positioned to navigate the uncertainty caused by the war. It will continue to closely monitor developments and follow a data-dependent, meeting-by-meeting approach in determining the appropriate monetary policy stance. In particular, the Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it, taking into account incoming economic and financial data, underlying inflation dynamics, and the strength of monetary policy transmission. The Governing Council is not pre-committing to any particular rate path.

ECB Key Interest Rates

The Governing Council has decided to raise the ECB’s three key interest rates by 25 basis points. Accordingly, the interest rates on the deposit facility, the main refinancing operations, and the marginal

Will It Be a Record-Breaking World Cup… Financially?

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The 2026 FIFA World Cup will not only be the largest edition in the history of soccer. It could also become one of the biggest sports monetization events ever recorded.

With 48 participating national teams, 104 matches, and a tournament jointly hosted by Mexico, the United States, and Canada, the competition represents an unprecedented expansion of the global soccer product. But behind the sporting spectacle lies a story equally relevant for investors, technology platforms, betting operators, and media companies: the creation of an ecosystem with larger audiences, more data, and more monetization opportunities.

FIFA estimates revenue of $8.911 billion during 2026, a record figure driven primarily by broadcasting rights, hospitality, ticket sales, and commercial agreements. Television rights alone are expected to generate approximately $3.925 billion, equivalent to 44% of projected revenue, while hospitality and ticket sales will account for another 34%.

The economic scale far exceeds the approximately $7.5 billion generated by Qatar 2022 and reflects how soccer has evolved into a global platform for entertainment and digital consumption.

More Matches, More Betting

The expansion of the tournament implies a substantial increase in business opportunities for the sports betting industry.

The 104 matches represent an increase of more than 60% compared with the 64 matches played under the traditional format. Each game generates hundreds of potential betting markets, ranging from final outcomes to specific statistics and live betting opportunities.

The trend coincides with the strong global growth of online betting and increasing technological sophistication driven by artificial intelligence, data analytics, and content personalization.

However, the biggest transformation may be taking place outside traditional sportsbooks.

From Betting to Prediction Markets

Platforms such as Polymarket and Kalshi are driving a new category: prediction markets.

Although conceptually similar to sports betting, they operate under a framework that more closely resembles financial markets. Users buy and sell contracts tied to the probability of specific outcomes, with prices fluctuating in real time based on available information and collective expectations.

The line between financial speculation and sports entertainment is beginning to blur.

During 2026, aggregate trading volumes across leading prediction markets have reached record levels, surpassing $24 billion per month during certain periods. At the same time, Kalshi and Polymarket have significantly expanded their market share within the sector, benefiting from growing acceptance among retail investors and participants from the crypto ecosystem.

The World Cup appears poised to become the industry’s next major catalyst.

Streaming and Digital Monetization

Another major financial battleground is content distribution. Audience fragmentation and the rise of mobile consumption have transformed the traditional sports broadcasting model. The 2026 World Cup is expected to be the most digital tournament in history.

The combination of traditional television, streaming platforms, social media, and personalized content will create multiple revenue streams beyond conventional advertising.

Monetization through subscriptions, targeted advertising, e-commerce, and digital experiences is likely to play an increasingly important role in the economics of sports.

An Industry Increasingly Resembling Wall Street

The evolution of the sports ecosystem points toward growing convergence among entertainment, technology, and finance.

Real-time information, artificial intelligence, tokenization, probability-trading platforms, and increasing participation from institutional investors suggest that the sports business is moving toward models that increasingly resemble financial markets.

In that context, the 2026 World Cup could be remembered not only as the largest tournament in sporting terms, but also as a turning point in how global attention is monetized.

More matches mean larger audiences; larger audiences generate more data; and more data creates new business opportunities. The World Cup is no longer just a soccer tournament. It is increasingly becoming a massive global financial asset.

Janus Henderson to Develop New AI-Based Analytics and Client Engagement Tools

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Photo courtesyAli Dibadj, CEO of Janus Henderson.

Janus Henderson has announced that it is developing a suite of AI-native tools to transform the way it invests and serves its clients. According to the firm, Percepta, a transformation company backed by General Catalyst, will be responsible for building the infrastructure, while Anthropic’s Claude will serve as the AI model layer.

The firm believes that cutting-edge AI delivers the greatest impact when it enhances human expertise, enabling an even more client-centric approach to both investing and client service. Building on Claude, Janus Henderson is putting this approach into practice in two ways that could shape the future use of artificial intelligence within the asset management industry.

Specifically, it is developing new AI-native tools for its investment and client service teams. On the one hand, the asset manager is working on Prism, a global client intelligence and engagement platform designed for Janus Henderson’s distribution teams. Powered by Claude, it helps sales teams prioritize the right outreach actions, leverage internal and third-party data to better understand what clients have and what they need, and prepare personalized communications. In this way, it provides a single, consistent tool for sales and marketing teams across all regions.

On the other hand, the firm is developing Libros, an AI-native research management tool for Janus Henderson’s investment teams. Also powered by Claude, it synthesizes the firm’s internal research alongside external research and public market data, helping analysts and portfolio managers identify relevant signals more quickly and devote more time to analysis and investment decision-making.

In addition, Janus Henderson is rolling out Claude across the organization. Its engineering teams will use Claude Code, while Cowork will be available to employees in investment, distribution, and corporate functions, further integrating AI into day-to-day work.

Meanwhile, Prism and Libros are being developed in collaboration with the technology teams at Janus Henderson and Percepta. Percepta helps large enterprises transform through AI by embedding specialized engineers, researchers, and product managers directly into organizations and leveraging the Percepta Mosaic platform to rapidly develop agent-based workflows and customized decision-support tools.

At Janus Henderson, Percepta’s teams work alongside the firm’s investment, distribution, and technology professionals to develop Prism and Libros on Claude, and to build the data and knowledge foundation that connects Claude to Janus Henderson’s proprietary research, client, and market data.

According to the asset manager, this integrated model addresses a challenge that has slowed AI adoption in asset management: generic tools rarely fit the way an active manager analyzes markets, manages portfolios, and serves clients. The value comes from connecting cutting-edge AI to proprietary data and rebuilding core workflows around it, which generally requires engineering embedded within the business rather than externally purchased software.

“We believe the AI transformation will fundamentally change the way asset managers serve their clients as it becomes integrated into the core of the business. This collaboration with Anthropic and Percepta, together with Janus Henderson’s partnership with Trian and General Catalyst, reinforces our leadership in AI and tokenization innovation and supports our ambition to be the most technologically sophisticated asset manager in the world. We believe it will improve the way we serve our clients—the 75 million people* around the world who trust us to help build a brighter future together,” said Ali Dibadj, CEO of Janus Henderson.

For his part, Peter Nolan, Head of Asset and Wealth Management at Anthropic, stated: “Asset management is a knowledge-intensive industry where reliable AI can help teams work faster and deliver better client service. Janus Henderson is putting Claude directly into the hands of the teams responsible for managing investments and client relationships—from purpose-built tools such as Prism and Libros to Claude Code and Cowork across the company.”

“Transforming industries with AI requires fundamentally rethinking how work gets done within organizations and designing engineering systems purpose-built for a new way of operating. Our work with Janus Henderson focuses on strengthening research and market intelligence while enhancing client engagement. We are proud to collaborate with Janus Henderson and Anthropic in transforming the asset management industry,” commented Hirsh Jain, CEO of Percepta.

Phil Orlando of Federated Hermes: “There Is Overvaluation, Not a Bubble; Technology Stocks Could Fall 20%”

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Phil Orlando, estratega jefe de mercados globales de Federated Hermes
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Phil Orlando, Chief Market Strategist at Federated Hermes, opened his presentation at INSITE 2026 with a historical perspective: from Eugene Black in 1933 to Jerome Powell, there have been eleven leadership transitions at the U.S. Federal Reserve, and the market tested every new chair without exception. “The market hits a rough patch, tests the new leader, and then recovers. By the end of the year, the new chair gains credibility,” he said.

The current transition, however, has several unique features that distinguish it from previous ones. The confirmation of the new chair was the closest in recent history, with a vote of 54 in favor and 45 against. In addition, Jerome Powell chose to remain a member of the Board of Governors after his term as chair expired on May 15, something that had happened only once before, with Marriner Eccles in 1948. This creates an unprecedented dynamic, with the outgoing and incoming chairs sitting at the same table. Finally, the meeting at the end of April recorded four dissenting votes, the highest number since 1982. The dissenters’ argument: the Fed should neutralize its bias in light of its dual mandate—inflation and employment—given that the labor market remains strong while inflation continues to exert upward pressure.

Against this backdrop, Orlando highlighted the critical calendar for the coming months: meetings on June 17, July 29, and September 16, with the new Federal Reserve chair’s inaugural speech at Jackson Hole, Wyoming, on August 28 serving as a pivotal moment. “That will be the moment when he presents his vision. We do not know what he will say or do, but the market will be paying very close attention,” he warned. His conclusion: there is a real possibility of turbulence during the summer.

Despite monetary policy uncertainties, Orlando remained constructive on the state of the economy. Combined retail sales growth in March and April reached 4.5% year over year, a result he described as solid. He acknowledged the argument of a bifurcated economy but downplayed it with a straightforward arithmetic exercise: the wealthiest 10% of the population accounts for approximately 50% of consumer spending, while private consumption represents 70% of GDP. Therefore, that top decile accounts for roughly one-third of GDP. “Stock prices are at all-time highs and home values have risen 50% from COVID lows. Sixty percent of Americans own stocks and property. They are doing well, and they are spending,” he explained.

Among lower-income households, recently approved tax reforms generated savings of approximately 18% year over year, enough to offset the impact of higher energy prices for roughly six months.

On the corporate side, Orlando highlighted the full expensing of corporate capital expenditures as the most stimulative element of the recently approved tax legislation. The result: productivity grew 3% over the last four quarters, well above the historical average of nearly 2% over the past five decades. Taking all these factors into account, he projected U.S. GDP growth of around 3% in 2027, significantly above the market consensus of approximately 2%.

On monetary policy, Orlando was direct. The two-year Treasury yield rose from 3.40%—the level at which pressure was mounting on the Fed to cut rates—to 4.10% currently, reflecting the energy supply shock and inflation. Looking at the data objectively, the more likely move would be a rate hike rather than a cut. However, he noted that the Fed typically does not react to temporary supply shocks. “The most likely outcome is that the Fed does nothing and waits for the energy situation and inflation to normalize,” he said.

Overvaluation, Not a Bubble: The Diagnosis and Strategy

Orlando firmly rejected comparisons with the technology bubble of the late 1990s. “These are real companies, with real products, real revenues, real earnings, and real valuations,” he said. Nevertheless, he acknowledged that valuations are ahead of fundamentals: his estimate for the S&P 500 is 20 times expected corporate earnings over the next 12 months, while the current multiple is around 22.5 times, implying that the market is trading roughly 12% to 13% above where it should be.

“Could there be a 10% correction during the summer and early fall? Absolutely. But we are nowhere near the 85% collapse we saw in the Nasdaq between 2000 and 2003,” he added.

In terms of asset allocation, Federated Hermes maintains a six-percentage-point overweight in equities relative to its benchmark—66% in stocks and 34% in bonds and cash—but Orlando was specific about where that exposure should be concentrated. Not in mega-cap technology stocks, which trade at 30 to 40 times earnings, but in sectors trading closer to 14 or 15 times earnings: domestic large caps, small caps, and emerging markets. These sectors also offer dividend yields of between 3% and 5%.

“If technology falls 20% or 30%, those sectors might decline only 5%, partially offset by dividends. The key is to stay invested but remain focused on valuation,” he summarized. In fixed income, he noted that the bond market has reacted more clearly than equities to the rebound in inflation: the yield on the 10-year Treasury rose from around 4.33% to nearly 4.70%.

The Election Cycle: The Dip That Is Always an Opportunity

To conclude, Orlando placed the current environment in historical perspective. Over the last 80 years of S&P 500 history, the two middle quarters of the U.S. midterm election year have historically been the weakest, partly because the party in power typically loses seats. This year also combines a Fed leadership transition with a midterm election cycle, a combination that has occurred only six times in the last 93 years and has always been accompanied by a market pullback of roughly 10% during the middle of the year.

But that weakness has also consistently represented a buying opportunity: from the market bottom in those years, equities went on to post sustained gains over the following two and a half years. “If I am right and there is a dip over the next quarter or two, that will be the time to buy with conviction. I believe we will be back at all-time highs before year-end,” he concluded.

Latin America Gains Wealth, but Loses Relevance Compared with Asia and North America

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The economic recovery recorded in Latin America during 2025 allowed the wealth of high-net-worth individuals (HNWIs) to return to a positive trajectory, according to Capgemini’s World Wealth Report 2026, published by the French multinational and global leader in consulting, technology services, and digital transformation.

However, the region’s progress remained well below that seen in the world’s leading wealth-creation hubs, reflecting both the structural limitations of Latin American economies and the widening gap relative to technology- and artificial intelligence-driven markets.

According to the report, the wealth of Latin American HNWIs increased by 5.1% in 2025, outperforming only the Middle East, where wealth contracted by 1.5%.

A comparison with the leading regions highlights the distance that still separates Latin America from the world’s major engines of wealth creation. Asia-Pacific led growth with an increase of 10.5%, followed by North America at 9.9%, Europe at 8.0%, and Africa at 7.0%.

Even more revealing is the performance of the high-net-worth population itself. While Asia-Pacific and North America recorded increases of 9.4% and 9.1%, respectively, the number of HNWIs in Latin America rose by just 0.3%, suggesting that wealth growth was concentrated primarily among existing large fortunes rather than driven by the creation of new millionaires.

The report identifies several factors behind the improvement observed in the region. Moderating inflationary pressures, a gradual recovery in investment, stronger corporate earnings, and relative macroeconomic stability created a more favorable environment for financial assets.

Mexico was among the best-performing markets. The wealth of its HNWIs increased by 5.4%, while the number of HNWIs rose by 1.8%, supported by strong corporate profits and greater macroeconomic stability.

Brazil also delivered positive results. The wealth of the country’s affluent individuals increased by 6.0%, driven primarily by utilities and commodities companies. However, the number of HNWIs declined slightly by 0.2%, reflecting greater wealth concentration.

The Region Is Growing, but Losing Relative Importance

Although Latin America is participating in the global expansion of wealth, Capgemini’s report makes it clear that the region is losing relative weight within global wealth.

Between 2018 and 2025, the wealth of Latin American HNWIs increased from approximately $2.6 trillion to nearly $3.5 trillion, confirming a positive long-term trend. However, the pace of growth has been insufficient to keep up with North America and, especially, Asia-Pacific.

The difference is largely explained by structural factors. Capgemini identifies three persistent obstacles: low productivity, weak job creation, and trade uncertainty.

While the United States and several Asian countries benefited from the boom in artificial intelligence, semiconductors, and technology, Latin American economies remain more dependent on traditional sectors and commodities, a structure that limits their ability to generate new fortunes at the pace seen in other regions.

Implications for the Wealth Management Industry

From the perspective of private banking and wealth management, the report’s message is significant. Latin America continues to generate wealth and investable assets, but the nature of market growth appears to be changing.

Rather than expanding through the mass emergence of new clients, the industry may increasingly depend on deepening relationships with already established wealthy families and individuals.

This environment particularly favors the ultra-high-net-worth segment, which globally continues to demonstrate the strongest capacity for asset growth and concentration.

For private banks, multifamily offices, and wealth managers, this means competition for existing clients is likely to intensify, while differentiation through private market solutions, wealth planning, succession services, and highly customized offerings will become increasingly important.

Technology Gap, Wealth Gap

The report’s strategic conclusion is that Latin America is experiencing a period of recovery, but not one of leadership.

The region has moved beyond some of the volatility that characterized recent years and is benefiting from greater macroeconomic stability. However, structural constraints and limited exposure to the sectors currently driving global wealth creation are widening the gap with North America and Asia.

The result is a combination of reasonable wealth growth (5.1%) and virtually no growth in the number of new HNWIs (0.3%), a dynamic that points toward greater wealth concentration and a less dynamic wealth management market than those found in developed economies.

In other words, Latin America continues to generate wealth, but not at a pace sufficient to prevent a gradual loss of relevance within the global wealth landscape.