LGT Private Banking today publishes its Global Outlook 2026: Equilibrium Shift, reiterating that disciplined diversification will be the strongest defence for long-term investors as the post-global financial crisis regime gives way to a period of global reordering.
2026 feels like a "world in mid-sentence": markets are recalibrating around higher inflation risk, larger public debt, and costlier capital - and decision-makers can no longer rely on the clear correlations and risk premia that anchored past decades.
"In 2026, the first cohort with no memory of the global financial crisis comes of age in an as-yet undefined era," says Mika Kastenholz, Global Head Investment Solutions at LGT Private Banking. "With historical markers losing relevance and a market driven by policy and geopolitics, it is smart diversification that must be investors' core discipline."
The Outlook identifies three key themes for 2026 that are particularly relevant for diversification decisions.
The first is the evolution of Artificial Intelligence (AI) from a software narrative to an energy, infrastructure, and financing challenge. Throughout 2026, physical bottlenecks around power, cooling, and site capacity will shift value from headline hyperscalers to infrastructure providers. As this shift unfolds, LGT recommends a "barbell" approach, balancing near-term enablers across the data centre and power value chains, with longer-term adopters of agentic and physical AI reshaping workflows, factories, and cities.
The second is the intensification of water stress, a structural challenge with underpriced implications for global portfolios. Around half of the world's population already faces seasonal water stress, and up to 31% of global GDP could be exposed by 2050 if current trends persist. Investors should account for resource fragility and geographically diversify across at-risk regions. They should also identify opportunities for innovative investment in water efficiency, recycling, and desalination, areas with implications for agriculture, energy, semiconductors and mining.
The final key theme is the growing institutional presence of digital assets. In 2025, Bitcoin's market capitalisation reached parity with the total value of physical US dollars in circulation, while volatility has decreased and institutional participation increased. However, the asset class's history of sharp downturns means it remains fundamentally shaped by volatility; and LGT treats digital assets as possible, but not assumed, diversifiers, emphasising disciplined sizing, governance, and scenario analysis.
For 2026, LGT's focus is on breadth, quality and agility. The bank is steering clients towards smartly diversified portfolios across regions, asset classes and structural themes, with a particular emphasis on flow-of-fund dynamics and where liquidity can be found when funding conditions tighten. Just as importantly, portfolios are being designed to pivot as scenarios change, rather than being anchored to a single macro narrative that may quickly date.
"Our job isn't to script every twist in the plot," says Mika Kastenholz. "It's to keep clients invested, manage their liquidity needs and ensure they are on course for their long-term goals, even when the world feels stuck mid-sentence."
LGT's full Outlook 2026: Global Equilibrium Shift, along with specific regional commentary, is available here.