Geopolitical risk once entered markets through sudden shocks. Going into 2026, leading investment managers and economists see a more persistent source of pressure: structural forces reshaping a world that is fracturing.
That picture emerges from Investment Officer’s outlook survey, which gathered responses from 28 senior investment leaders at firms including Blackrock, Fidelity, J.P. Morgan, Goldman Sachs and Amundi. Across their responses, one theme dominates: fragmentation is no longer a cycle but a system.
Fragmented world
The rivalry between the United States and China has moved beyond trade disputes and is now a defining force in global economic organization. Aegon Asset Management describes this as the primary geopolitical risk for the year ahead.
“The primary risk is expected to be a renewed US-China trade war, especially with the current trade deal expiring next year,” said Jacob Vijverberg, asset allocation lead at Aegon AM. “China has shown it can exploit vulnerabilities, such as rare earth metal supply. New negotiations will likely bring further uncertainty. It is not obvious that either China or the US would be most impacted, as it is Europe and parts of Asia which are more at risk due to strong trade ties with both sides and less technological dominance.”
MFS Investment Management sees these forces spreading through adjacent domains. “The ongoing economic decoupling of the US and China continues to impact the global economy, compelling nations to address the fallout of this significant shift,” said Benoit Anne, senior managing director and head of the market insights group at MFS.
He points to three interlocking vectors: the deepening US–China decoupling across key industries; the global race for AI supremacy, which requires vast energy capacity and stronger cyber defenses; and the rise of populist politics, which is weakening traditional policy anchors.
“These developments demand broad diversification and a focus on resilient companies,” Anne added, noting that selective emerging-market bonds may offer opportunities where fiscal fundamentals are stronger.
Tech pressures
Technology is becoming one of the most visible arenas of geopolitical competition. Respondents highlighted concentrated supply chains for semiconductors, data infrastructure and rare earth minerals as growing vulnerabilities.
Van Lanschot Kempen stresses the geopolitical leverage embedded in these dependencies. “Further deepened isolationism by the U.S. is perhaps the greatest risk, with a resurgence of the tariff war,” said Luc Aben, the firm’s chief economist. “More broadly, we are seeing the economy used as a geopolitical weapon — for example, by China in the area of rare earth materials.”
Fiscal dominance
Many asset managers identify fiscal dominance as a second major risk vector. High debt levels are limiting policy flexibility just as governments face rising demands for defense, infrastructure and energy investments. Several respondents noted that leadership changes at major central banks, including the Federal Reserve and the ECB, could increase the risk of political pressure on monetary policy.
In this context, a shift in market confidence toward sovereign credit could trigger sharp repricing in rates markets, especially in economies with elevated debt-to-GDP ratios. Fiscal instability, they warn, is becoming a geopolitical variable in its own right.
Tail risks
While structural pressures dominate the outlook, the probability of sudden military developments remains a significant tail risk. RBC BlueBay points to two focal points that could shift market sentiment without warning.
“With ongoing tensions around Taiwan, and continued support for Russia, geopolitical risks remain center stage,” said Kaspar Hense, senior portfolio manager at RBC BlueBay. “With ongoing weakening of the Russian economy and Europe in desperate need to increase defense capacities, this will likely drive ongoing investments in the defense sector.”
Other managers noted concerns about an escalation in Ukraine or a miscalculation in the Taiwan Strait. China’s recent accumulation of gold reserves is viewed by some as possible contingency planning for future sanctions.
Investor response
Amundi has described this global state as “controlled disorder.” It forces asset managers to adjust their playbooks, something which is broadly acknowledged in the survey. Diversification across blocs, sectors and asset classes is emerging as the primary defense. Beneficiaries of this shift include India, Japan and selected European defense and energy businesses.
Others emphasize real assets, infrastructure and commodities as buffers against supply-chain disruptions and fiscal instability. Gold and selective currency hedges also feature in positioning strategies.
Investment Officer Outlook Survey 2026
This article is the final one in a series of five based on a survey that Investment Officer sent in November to asset managers operating in Europe. The findings are based on written responses from strategists and investors at Aberdeen, Aegon Asset Management, Amundi, Blackrock, Capital Group, Cardano, Carmignac, Columbia Threadneedle Investments, Comgest, DWS, Fidelity International, Goldman Sachs Asset Management, Invesco, JP Morgan Asset Management, Legal & General Investment Management, M&G Investments, MFS Investment Management, Natixis Investment Managers, Northern Trust Asset Management, Nuveen, PGIM Fixed Income, Pictet Asset Management, RBC Bluebay, Robeco, Schroders, Triodos Investment Management, Van Lanschot Kempen and Vanguard. Together these asset managers oversee an estimated 54,000 billion dollar globally, just over 40 percent of the market.