Autumn 2026 Investment Directions: ETF implementation ideas

Traditional approaches to diversification may be less reliable as correlations – or the way asset classes move in relation to one another – shift.

We see opportunities to build more resilient portfolios by combining investments that respond differently as markets change.

What role can gold play in portfolios?

We still see a role for gold in portfolios, particularly as a potential diversifier alongside equities and bonds. Historical analysis shows relatively low correlation between gold and global equities and bonds, which can help broaden portfolio return drivers.²

How can investors stay invested in equities while seeking to mitigate downside risk?

For investors who remain constructive on US equities but wish to hedge against the risk of episodic drawdowns into year-end, buffer strategies could offer a way to reshape – rather than reduce – equity exposure. In particular, we see a role for deep buffers, which retain capped upside participation while seeking to provide a level of protection against more meaningful market weakness – c.-5% to -20% of quarterly S&P 500 downside*.

How can investors broaden sources of return in equity portfolios?

Investors can complement broad market exposure with strategies that seek returns from company-specific opportunities rather than relying mainly on overall market direction. In our view, listed infrastructure can also provide a differentiated source of equity exposure and broaden the opportunity set within an equity portfolio.

*Portfolio Managers’ current process, which is subject to change without notice.

Income opportunities are broader than they have been for much of the past decade. More than 80% of the global fixed-income universe now yields above 4%, compared with less than 20% on average between 2010 and 2021.³

But attractive yields do not mean every opportunity offers the same reward for the risk taken. We see scope to look across different areas of fixed income and beyond traditional bonds for income.

Beyond traditional credit: Where can investors find diversified income opportunities?

We favour flexible fixed-income strategies can invest across corporate bonds, securitised credit, high yield and emerging-market debt as conditions change.

AAA CLOs can provide another source of income, combining floating-rate exposure with limited sensitivity to changes in interest rates.

Beyond developed markets: Where are the opportunities in emerging market debt?

Emerging-market debt (EMD) can provide attractive income alongside return drivers that differ from developed-market bonds. Despite geopolitical uncertainty, fundamentals have remained resilient, with at-trend global growth supporting risk appetite. Within this space, we favour short duration startegies.*

However, opportunities differ considerably between countries and regions, making selectivity important.

Beyond traditional bonds: How can investors plan for future income needs?

Fixed-maturity ETFs can provide a simple way to target future cash-flow needs while retaining the diversification and tradability of an ETF.

Investors can select a maturity date that aligns more closely with when they expect to need their capital or income.

*Emerging markets risk

Emerging markets are generally more sensitive to economic and political conditions than developed markets. Other factors include greater 'Liquidity Risk', restrictions on investment or transfer of assets, failed/delayed delivery of securities or payments to the Fund and sustainability-related risks.