The shares attracting fund managers at start of 2026

We asked global equity investors to share their outlooks for the UK, US and Europe for this year and highlight where they are finding the best value opportunities.

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United States

Historically a mainstay of global portfolios, US equities gave investors pause for thought in early 2025 as high valuations and policy shifts prompted them to look elsewhere for growth opportunities.

Nervousness around heavy weightings to US tech stocks and whether artificial intelligence (AI) was being overpriced in terms of valuations also compounded the search for diversification. Moreover, concentration risk was a key concern and remains so. Seven companies, dubbed the “Magnificent Seven”, account for 35% of the market capitalisation of the S&P 500 index compared to around 12% a decade ago.

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​​​​​Although markets rebounded, macro concerns remained. However, three recent rate cuts in quick succession and fiscal benefits from the“big, beautiful bill” could lead to a broadening out of the US market.

Colm Harney, portfolio manager at Sarasin & Partners, is bullish on the outlook for the US based on the macro backdrop.

“The US continues to offer the most compelling value, with momentum building into 2026 as monetary policy eases, fiscal support strengthens, and investment shifts towards productivity-enhancing areas,” he says.

While inflation remains above target, Harney says lower rates and firm capital expenditure should help sustain earnings growth. Compared to the UK, which Harney says faces persistent domestic inflation and structural supply constraints, and Europe’s modest recovery, Harney believes US equities are best positioned for durable nominal growth.

He picks data infrastructure firm NetApp Inc (NASDAQ:NTAP) as an example of this. “Strong returns on capital, improving margins and disciplined capital allocation make NetApp a good example of a thematic, structural growth stock trading at a reasonable valuation within US equities.

“It offers dependable mid-single-digit growth driven by the long-term expansion of enterprise data volumes,” he adds.

Following the pushback against AI companies, James Cook, co-manager of the JPMorgan Global Growth & Income Ord (LSE:JGGI) trust, has been taking advantage of shares trading on lower valuations.

“We are finding some of the most interesting opportunities in areas where short-term market swings have pushed strong companies to surprisingly low prices,” he says.

“The recent drop in several AI-related shares is a good example. Companies such as NVIDIA Corp (NASDAQ:NVDA) in the US are central to the growth of AI and semiconductors, and we think the market is overlooking how powerful their long-term earnings potential could be.”

Cook is also keen on businesses already seeing financial results from investing in AI investment, such as Meta Platforms Inc Class A (NASDAQ:META).

“By using AI to improve how people interact with its platforms and how advertisers reach customers, it has grown earnings even when the share price has been volatile.”

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Robert Plant, portfolio manager, multi-asset solutions at Columbia Threadneedle Investments, is also a fan of Nvidia, which he names as a core holding.

“Our view is that the US continues to lead the way in AI and technology innovation, which is driving strong earnings growth and productivity gains,” he says.

Plant adds: “Our key US holdings such as Nvidia, Adobe Inc (NASDAQ:ADBE), Morgan Stanley (NYSE:MS), and General Motors Co (NYSE:GM) are well placed to benefit from these trends.

“We are currently tactically overweight the US, with this funded by underweights in the UK, and Europe,” he adds.

Europe

After a strong start to the year, European equities were sidelined as investors scouted for better growth prospects in other regions. But Germany’s €500 billion (£433 billion) infrastructure and defence spending package and the European Union’s Readiness 2030 plan are among the national policies that could underpin economic growth and spur investment opportunities.

Julian McManus, portfolio manager on the global alpha equity team at Janus Henderson Investors, says the increased defence spending could support further upside for companies such as German arms manufacturer Rheinmetall AG (XETRA:RHM).

“After years of underinvestment, rebuilding military readiness in Europe will take well over a decade, and with orders there just beginning to build, we believe the potential magnitude and duration of the cycle remains under-appreciated by the market,” he says.

Claudia Quiroz, a fund manager at Quilter Cheviot, has been rotating out of US equities and into European equities, on the back of attractive valuations, dovish policy, and increased fiscal and defence spending across the region.

Healthcare innovation is one of the themes in the portfolio, with the rationale being that the growing over-65 cohort is spending a significant share of their wealth on health and well-being.

“We favour companies with a global healthcare footprint and a record for innovation, such as Novartis AG Registered Shares (SIX:NOVN), which has a promising pipeline of developments along with strong cash generation to support capital returns,” Claudia says. 

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Columbia Threadneedle’s Plant remains cautious on the outlook for Europe, citing the near-term economic and political challenges and structural headwinds, but says the fiscal stimulus should prove beneficial to domestic European sectors, particularly banks and infrastructure.

“Key holdings include Deutsche Telekom AG (XETRA:DTE), Allianz SE (XETRA:ALV), E.ON SE (XETRA:EOAN), and Vinci SA (EURONEXT:DG),” he says. “These companies are well positioned to benefit from the ongoing energy transition and fiscal support.”

UK

UK equities had a strong year despite sluggish growth in the UK economy. With inflation remaining above the Bank of England’s target and rising unemployment, the economic outlook has been gloomy. The recent interest rate cut was a tonic for consumers, but will investors pivot back to the UK?

Debbie King, co-manager of the Aegon Diversified Monthly Inc GBP B Acc fund, says the UK is at the peak of the rate cycle, which presents a potentially better environment for rate-sensitive alternatives that are currently under-owned, with room for valuations to rerate. She highlights property company Segro (LSE:SGRO) as an example.

“Segro is a leading FTSE 100 industrial warehouse owner and developer with strong operating metrics and a large asset base well positioned to benefit from improving market dynamics. Signs of green shoots are already apparent in its development pre-letting activity.”

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Columbia Threadneedle’s Nish Patel, fund manager on The Global Smaller Companies Trust Ord (LSE:GSCT), has over 18% allocated to the UK, which he notes is “far more than most global funds”.

“Many UK-listed smaller companies are international in nature, but they are being pulled down by negative sentiment tied to domestic macro issues,” he says. “For long-term investors, that disconnect between fundamentals and valuation is where opportunity arises.”

He adds that low valuations are driving M&A activity in the portfolio.

“Last financial year we had six takeover bids, and we’ve already seen three more this half year – Treatt (LSE:TET), Alphawave IP Group Ordinary Shares (LSE:AWE), and JTC Ordinary Shares (LSE:JTC) – which underscores how buyers are taking advantage of the dislocation.”

Meanwhile, James Bullock, co-portfolio manager of the Lindsell Train Global Equity A GBP Inc fund, believes analytics company RELX (LSE:REL) and the London Stock Exchange Group (LSE:LSEG) have been mispriced by the market on AI disruption fears.

“Two of our largest positions in UK companies, RELX and LSEG, represent potentially good value at current levels,” he says.

“Despite continued robust operating performance, the share prices of both companies have fallen sharply in recent months on concerns that AI agents could disrupt their business models.

“We continue to believe that AI looks more like an opportunity than a threat for both businesses, with workflows built on trust, compliance, and proprietary data among the most insulated from disruption.”

Bullock adds that both companies are trading on a forward price/earnings (P/E) multiple in the low 20s, which he says is highly attractive for investors willing to look past the short-term noise.

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Aberdeen’s Marty Connaghan, manager of the Murray International Ord (LSE:MYI) investment trust, has been adding to UK large-cap Unilever (LSE:ULVR).

He says that despite a backdrop of persistent negative sentiment towards UK equities, performance in 2025 has been notably robust.

“While sentiment remains cautious as we move into 2026, fundamentals and valuation support have driven solid returns, highlighting the importance of looking beyond headlines when assessing UK equity opportunities,” he says.

“The relative valuation spread has narrowed somewhat this year, but we still believe there are attractive opportunities at the stock level in the UK.”