War, volatility and opportunity: your 2026 mid-year check-in

By James Yardley on 1 July 2026 in Equities

We’ve endured a pretty turbulent first six months of 2026 with the US at war, soaring energy prices, stock market volatility, and the resignation of Labour leader Sir Keir Starmer. But what does the rest of the year have in store? Where should you put your money – and which areas are best avoided? Here is our five-step guide to giving your portfolio a mid-year reset.

Step one: What’s happened so far?

Investment returns haven’t been too bad, despite the newspaper headlines. Many global stock markets have reached record highs after better-than-expected corporate results. Japan has been one of the strongest performers, thanks largely to the artificial intelligence boom and strong semiconductor demand.

Global fixed income markets, meanwhile, have had a mixed few months with volatility caused by the Middle East conflict and political uncertainty. Indian equities have also been affected by this backdrop and the impact of US tariffs, while cryptocurrencies have illustrated their speculative nature with plunging valuations.

We talk more about the first half of 2026 on our recent quarterly market podcast:

Step two: Key themes for the rest of 2026

One consistent theme highlighted by several fund groups is for AI-related enthusiasm to continue. That doesn’t just mean focusing on the so-called ‘Magnificent Seven’ mega-cap tech names such as Apple. According to BlackRock’s Investment Institute, the opportunities may lie elsewhere. “We favour physical infrastructure and equipment supporting the AI buildout, like semiconductors, power and data centre assets, that we think stand to benefit no matter the winners or losers,” it stated.

The AI boom will help US equities, according to Morgan Stanley. It expects them to lead global market gains, with the S&P 500 expected to go up 12% over the coming year*. “Morgan Stanley Research recommends an overweight position on equities, an underweight position in core fixed income and equal weight in other fixed income, commodities and cash,” it stated.

Step three: Review your portfolio

Have your investments performed as expected? Consider the returns in context. For example, has the fund beaten or lagged its peer group? What are the reasons behind it? Of course, the scope of this review will depend on when you last implemented an overhaul. If it was only at the start of 2026, then hopefully not much has changed.

Remember, investment time horizons should be at least five years to smooth out the potential volatility. How do you view the outlook? Which asset classes are most attractive? Are there particular countries and sectors that you want exposure to in your overall portfolio?

Break down your overall portfolio by asset class, investment style, regional allocation, and industry sector – and decide whether the construction echoes your current views.

Step four: Reconsider your objectives

Are cash holdings eroding your wealth? If you’re holding substantial amounts in savings accounts, then you need to ensure they’re beating the current rate of inflation.

Elsewhere, increasing diversification could be important, according to Fidelity, which pointed out that we live in a “fragmenting world order” that requires extra vigilance from investors. They noted: “Traditional safe havens will not play the same role as they used to, and diversification will prove more important than ever (but harder to achieve).”

Step five: Consider fund changes

The final part is tweaking your existing allocation. Consider everything carefully. Remember that making any changes is likely to incur costs. Only do so if you’re convinced it will help you achieve your financial goals and ensure you carry out proper due diligence on potential fund additions. There are hundreds of portfolios to choose from, but we’ve identified six that may benefit from several key themes over the remainder of 2026.

Six funds to consider for the second half of 2026

Our first suggestion is the Landseer Global Artificial Intelligence fund. It invests in the likes of NVIDIA** and uses an AI system to identify companies whose business models align with this theme. This means that the fund is a more diversified play on the growing AI theme. Consumer discretionary, financials and industrials are among the sector allocations.

Another way to gain exposure to the AI trade is through the FTF Clearbridge Global Infrastructure Income fund, which has benefited from this area’s tailwinds. Listed infrastructure saw strong returns in 2025, helped by AI-driven demand for power from electric utilities and gas infrastructure, according to Shane Hurst, one of the fund’s managers. “The need to power AI and the growth of data and computing it entails has led to explosive power and gas demand,” he wrote. “Electric and gas utilities are investing heavily in building smart grids with improved demand response and in reliability and efficiency.”

Our third pick is the T. Rowe Price Global Select Equity fund, an unconstrained, high-conviction portfolio whose managers scour the world for the best opportunities. For those who already have a global fund, you may wish to add US exposure as a satellite bolt-on, and one that we like is GQG Partners US Equity. This is a concentrated portfolio of high-quality US companies with durable earnings. It has delivered very impressive returns since launch. Another option is to add the Schroder US Mid Cap fund to the mix. As its name suggests, this looks for opportunities within small and medium-sized companies.

Finally, India underperformed global markets in 2026 – but this could represent an opportunity for investors to get exposure to tomorrow’s winners according to Juliet during our recent podcast. The Goldman Sachs India Equity Portfolio aims to capture the growth potential of the Indian economy and invests in businesses of all sizes.

Then there’s Japan. While the country has performed well, analysts expect the good times to continue for longer due to AI exposure and corporate reforms. We like the JK Japan fund. It’s a core large-cap fund that identifies investment themes and then carries out bottom-up analysis to find the best opportunities.

*Source: Morgan Stanley, 15 May 2026
**Source: fund factsheet, 31 May 2026