Hal Cook, senior investment analyst at Hargreaves Lansdown, outlines how investors can prepare for 2026 by diversifying across global equities, emerging markets and capital-preservation strategies.
Hal Cook, senior investment analyst, Hargreaves Lansdown:
“Whether you’re concerned about geo-political risks and conflicts, stretched valuations or above target inflation, there’s lots for investors to contend with as we move into 2026.
In an uncertain environment, we think it makes sense for investors to diversify across asset classes, regions, sectors and styles to reduce the risk that any one event blows your whole portfolio off course. Below we highlight three investment trusts that our analysts think could be useful additions to an investment portfolio to add some diversification. These three are picked from the ‘5 to Watch’ campaign – the full selection can be found here.
Alliance Witan Trust
When it comes to diversifying an investment portfolio, making use of trusts that invest in stock markets all over the world seems like a sensible place to start. For portfolios that already have a lot invested in large US technology companies, or are focused more on the UK, adding some additional regional diversification could be useful.
The Alliance Witan Trust aims to grow an investment and provide a rising income over the long term by investing in companies from around the globe. The trust adopts a multi-manager approach, which means portions of the trust are run by different fund managers which means there’s plenty of diversification on offer.
The trust’s Investment Committee believes that the majority of stock pickers outperform with their highest conviction investments but hold back returns with their smaller holdings. That’s why they only let most of their underlying managers invest in their 20 best ideas.
They have 11 different managers whom the Investment Committee blend together in the trust, ensuring there isn’t too much risk at a company, sector, or geographical level as well as a portfolio balance in terms of investment style.
The trust is also an AIC ‘dividend hero’ having increased its dividend for 58 years in a row.
In an environment where we think it will pay to be diversified, we think the trust could be an interesting option. The trust could be used for income or to bring international diversification to a more UK focused portfolio.
JPM Emerging Markets Growth & Income
Another way that an investment portfolio might be diversified is through adding some specific investments in global emerging markets. We also feel that the re-orientation of supply chains in response to US tariff policy has the potential to benefit economies across Asia and Emerging Markets over the short to medium term.
The JPM Emerging Markets Growth & Income trust aims to achieve long term growth in capital and income by investing in high quality businesses capable of delivering long-term growth. The managers believe most investors underestimate the potential for share price growth in companies that can grow their earnings over a long period of time.
The trust is managed by emerging markets veterans, Austin Forey and John Citron. They benefit from a well-resourced team of over 100 investment professionals across nine countries, giving them eyes in most corners of the market. We think this is invaluable given the vast range of countries, cultures, and companies within their investable universe.
Personal Assets Trust
In an environment where there are a lot of potential risks to consider, investing in something that actively tries to keep losses to a minimum can provide some ballast to an investment portfolio. It can also give the investor a little peace of mind.
Personal Assets Trust is a great example of this type of investment trust. It aims to grow investors’ money steadily over the long run, while limiting losses when markets fall. We like the simple philosophy behind this trust, with the potential for long-term growth and a focus on preserving wealth in weaker markets.
The trust is focused around four ‘pillars’, which helps to smooth out returns over time.
The first contains large, established companies that managers Sebastian Lyon and Charlotte Yonge think can grow over the long run and endure tough economic conditions. The second pillar is invested in government bonds. The third pillar consists of gold-related investments, including physical gold, which has often acted as a ‘safe haven’ during times of uncertainty. The final pillar is ‘cash’. This helps provide important shelter when markets stumble, but also a chance to invest in other assets quickly when opportunities arise.”
