Disciplined diversification will be the strongest defence for long-term investors amid global uncertainty, LGT Private Banking has said.

The private bank described 2026 as a “world in mid-sentence”, with markets recalibrating around higher inflation risk, larger public debt, and costlier capital.

It warned that decision makers can no longer rely on the clear correlations and risk premia that anchored past decades.

“In 2026, the first cohort with no memory of the global financial crisis comes of age in an as-yet undefined era,” said LGT Private Banking global head investment solutions, Mika Kastenholz.

“With historical markers losing relevance and a market driven by policy and geopolitics, it is smart diversification that must be investors’ core discipline.”

In its Global Outlook 2026 publication, LGT Private Banking identified three key themes relevant for diversification decisions this year.

The first was the evolution of artificial intelligence (AI) from a software narrative to an energy, infrastructure, and financing challenge.

It expected physical bottlenecks around power, cooling, and site capacity to shift value from headline 'hyper-scalers' to infrastructure providers throughout 2026.

LGT urged investors to balance near-term enablers across data centre and power value chains with longer-term adopters of agentic and physical AI, reshaping workflows, factories, and cities.

Secondly, LGT warned of the intensification of water stress, highlighting it as a structural challenge with underpriced implications for global portfolios.

Investors were encouraged to account for resource fragility and diversify geographically across at-risk regions.

Additionally, opportunities for innovative investment in water efficiency, recycling, and desalination should be identified.

The final theme in the outlook was the growing presence of digital assets into the institutional space.

Last year, Bitcoin’s market capitalisation reached parity with the value of physical US dollars in circulation, while volatility decreased and institutional participation increased.

However, LGT highlighted the asset class’s history of sharp downturns, meaning it remains shaped by volatility.

In the year ahead, LGT is steering its clients towards smartly diversified portfolios across regions, asset classes, and structural themes, with particular emphasis on flow-of-fund dynamics.

Portfolios were being designed to pivot as scenarios change, rather than being anchored to a single macro narrative.

“Our job isn’t to script every twist in the plot,” said Kastenholz. “It’s to keep clients invested, manage their liquidity needs and ensure they are on course for their long-term goals, even when the world feels stuck mid-sentence.”

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