Swiss private bank Lombard Odier sets out its views on the investment outlook and opportunities for 2026, highlighting the attractiveness of emerging markets, as well as gold and gilts.

Like a number of wealth managers, Swiss private bank Lombard Odier believes that emerging markets look well positioned in 2026 in a world of more intense competition for resources and technology, supported by accommodative fiscal and monetary policies.

“Emerging market assets will benefit from economic expansion, and long-term trends including urbanisation, automation, and a rising middle class,” the bank said in a note. In China, Lombard highlighted two themes: technology, which spans cloud computing, artificial intelligence, electric vehicles and semiconductors, and sustainability, where China benefits from leadership in rare earths, solar and water conservation technologies.

Their views are shared by a number of wealth managers. For example, Daniel Casali, chief investment strategist at UK wealth manager Evelyn Partners, also highlighted recently that emerging markets outperformed developed markets in 2025 and could do so again in 2026, supported by a weaker US dollar.

Lombard Odier expects growth in developed economies to remain below potential in 2026. Within developed market sovereign bonds, the bank thinks UK Gilts stand out as inflation slows and interest rate cuts loom. Commodities, particularly materials, are benefiting from AI and electrification trends, and gold from geopolitical fragmentation, the bank added.

Casali also said that gold’s rally to record highs has been driven by structural demand led by central banks in emerging economies. While Stephen Snowden, head of fixed income at Artemis Fund Managers, manager of the Artemis Short-Duration Strategic Bond and Artemis Corporate Bond, recently stated his preference for UK gilts in 2026. See here.

Below, Lombard Odier outlines its 10 convictions for 2026:

1. Emerging markets’ revival
After years of weak performance, 2026 looks promising for emerging market assets. Emerging market equity valuations are attractive and the bank expects them to enjoy robust earnings growth of 17 per cent. Earnings drivers include rising economic growth, urbanisation, automation, and a growing middle class fuelling consumption. Emerging markets also benefit from resource ownership critical for the energy transition and youthful demographics in India and Brazil. Emerging market bonds offer compelling yields while public debt ratios and external balances remain healthier than in developed markets. Emerging market currencies are also well supported, especially against the US dollar, and the US interest rate cuts we expect in the second half of 2026 will maintain this momentum.

2. China tech and sustainable China 
Chinese equities are volatile, but sectors designated as strategic policy priorities can outperform. For 2026, Lombard Odier favours two key themes: Chinese technology and sustainability. China’s tech firms span capabilities in cloud computing, artificial intelligence, e-commerce, electric vehicles, and semiconductors, with strong earnings growth and faster adoption of advanced technologies than in developed markets. China is closing the tech gap with the US and building spare power capacity to support its AI ambitions. The country’s sustainability leadership benefits from its dominance in rare earth refining, electric vehicle supply chains, and solar energy. China is also making progress in water conservation and digitalised treatment systems, reinforcing its role in the global energy transition.

3. Quality developed market equities with attractive dividends
Reinvesting dividends is one of the most reliable strategies for wealth preservation and growth in equity portfolios. Quality, dividend-paying companies in developed markets can offer attractive cash flows, lower stock price volatility than the broader market, and strong balance sheets. These companies span industries such as financials, energy, industrials, healthcare, consumer staples, utilities, and real estate. Such sectors can include some exposure to technology that helps to sustain dividend growth and reduce industry-specific risks. Quality dividend stocks can anchor portfolios in volatile periods and can help shield performance in times of uncertainty and amid current elevated valuations.

4. Developed market small and mid-capitalisation recovery
Developed market small and mid-cap equities recovered in the second half of 2025 thanks to easing monetary policy, improving earnings revisions, and capital expenditure. In 2026, Lombard Odier expects small and mid-caps to keep outperforming, driven by accelerating earnings growth and attractive valuations relative to large caps. The bank also sees tailwinds from AI-driven productivity gains, rising merger and acquisition activity and any changes to US import tariffs. Historically, these stocks tend to lead in periods of profit recovery and interest rate cuts. Investor positioning is light, leaving room for more inflows to this segment.

5. High yielding developed market sovereign bonds: preference for UK gilts
With corporate spreads – or the yields offered in excess of those offered by sovereign bonds – at historically tight levels, select, high-yielding government bonds offer attractive risk-adjusted returns. Like a number of wealth managers, Lombard Odier favours 10-year UK gilts; while the UK’s debt-to-GDP ratio is above 100 per cent, November’s government budget focused on fiscal consolidation. Tax rises will lead to lower refinancing needs and sovereign bond issuance. With a sharp decline in inflation, the bank expects the Bank of England to cut policy rates by 100 basis points in 2026, leading to a fall in long-term yields, and attractive total return prospects for gilts.

6. Convertible bonds
Convertible bonds combine a bond with an equity call option, or the right to convert the debt into stock if the price rises significantly. The former offers a downside cushion and the latter offers participation in rising equity markets. Convertible bonds thrive in environments that combine moderate economic growth with market volatility, providing diversification along with the ability to capture greater upside than downside risk. Global convertible bonds have significant exposure to the Asia Pacific region and sectors such as utilities, real estate, and materials. Current conditions of low volatility make them attractive to add to a portfolio, as the equity call options gain in value when volatility rises. Convertible bond issuer default rates fell in 2025, supported by lower interest rates. Lombard Odier expects further US rate cuts to sustain favourable conditions in 2026.

7. Swiss and European real estate  
Lombard Odier believes that Swiss real estate investments still offer an attractive alternative source of yield for Swiss franc-based investors. The distribution yield of Swiss real estate funds over 10-year Swiss sovereign bonds is at its highest level since 2022, offering a better alternative than many corporate bonds. The difference between European real estate yields and the benchmark market interest rate for borrowing over five years is significant. As the European Central Bank has cut policy rates, real estate now offers an alternative source of income for euro based investors.

8. Commodities and commodity-related stocks  
Commodities have become strategically important as AI adoption and digitalisation drive energy and infrastructure demand. These shifts are boosting investment in renewables and electrification, lifting demand for copper, aluminium, rare earths and uranium, which are critical for data centres, electric vehicles and grid upgrades. Like a number of wealth managers, Lombard Odier believes that the appeal of precious metals, led by gold, increases as geopolitical fragmentation deepens and central banks diversify their reserves. Limited mining capacity underpins our expectation of higher gold prices, and supports the banks preference for the materials sector within equities.

9. Hedge funds and private equity 
To enhance diversification in 2026, Lombard Odier believes that investors should maintain exposure to hedge funds and private equity. Hedge fund strategies that focus on corporate activities, such as event-driven strategies, and equity market price dislocations, such as relative value/arbitrage strategies, can deliver returns irrespective of the direction of the broader equity market. Private equity can complement these exposures. Here the bank favours strategies that target mid-sized businesses at sensible valuations, using less leverage than mega-cap buyouts and making operational improvements to create value. Co-investments and secondary private equity deals can offer lower fees, greater flexibility and better cash flow timing for investors. Together, these alternative investments can provide independent sources of return and resilience during periods of public market volatility, with the aim of strengthening portfolio diversification.

10. Focus on undervalued currencies: Japanese yen, Chinese renminbi, Swedish krona
Among major developed market currencies, Lombard Odier thinks that the Japanese yen looks undervalued, with policy rate convergence set to push the US dollar lower against the yen in 2026. Interest rate cuts from the US Federal Reserve and further monetary policy tightening from the Bank of Japan will spur repatriation flows. They will also help the unwinding of trades in the yen that were used to finance higher yielding opportunities overseas, as higher domestic Japanese yields reduce the appeal of holding foreign bonds. The bank also expects the recovery in the Chinese renminbi seen in 2025 to continue, driven by resilient Chinese exports, a current account surplus, and ongoing internationalisation in trade and investment – factors that strengthen China’s balance of payments and justify further currency gains. In Europe, the bank sees the Swedish krona as being substantially undervalued, and expects a further recovery, supported by improving cyclical growth, especially in Sweden’s rate-sensitive housing market, and by a high exposure to improving German growth prospects. Sweden’s well developed defence sector also positions it as a beneficiary of the increased global focus on defence spending.