Janus Henderson Investors believes 2026 will mark a shift from broad-based equity gains toward more targeted opportunities, as investors recalibrate portfolios.
In its latest outlook, the asset manager highlights utilities, technology, healthcare and select financials as areas where secular growth themes and improving fundamentals could support returns, even as macroeconomic and geopolitical risks remain elevated.
The outlook follows a strong finish to 2025, with global equities extending gains on the back of resilient US economic growth and solid corporate earnings. However, Janus Henderson’s US-based research team says the next phase of the market cycle is likely to reward disciplined stock selection rather than broad market exposure.
In energy markets, the firm remains cautious on oil prices, citing downside risks from potential increases in supply. Research analyst Noah Barrett said crude prices already reflect much of the expected oversupply.
“However, we think there is more downside than upside risk for oil prices, especially if US involvement in Venezuela results in more crude reaching the market. Given this risk, we remain defensive in our positioning, even as we focus on energy companies with high-quality, long-duration assets that we believe are underappreciated by the market,” Barrett said.
By contrast, the firm is constructive on utilities, driven by rising electricity demand from artificial intelligence and the ongoing electrification of the economy.
“We believe the expanding AI complex will remain a large consumer of electricity. This growing demand, combined with the ongoing electrification of the broader economy, makes a strong case for investing in utilities.”
Barrett said unregulated power markets offer the most direct exposure to these trends, while regulated utilities could also benefit from valuation support as power demand growth becomes more visible.
In industrials, Janus Henderson is prioritising companies aligned with secular growth themes and less exposed to cyclical uncertainty, such as commercial aerospace, electrification and precision farming.
“While valuations of such companies have experienced multiple expansion, we remain excited about strong revenue growth potential that may flow through to higher margins and profits,” research analyst David Chung said.
The firm is also targeting well-managed businesses with operational improvements or unique catalysts that could support stable profit growth.
“We remain on the lookout for signs of a short-cycle recovery, even as we monitor risks around tariffs, geopolitical uncertainty, and trends in consumer and business confidence.”
Within financials, portfolio manager John Jordan said opportunities remain across global financial services, particularly among companies benefiting from electronic payments growth and the use of proprietary data and advanced technologies, including AI.
Janus Henderson is also constructive on select European banks, pointing to potential capital returns, regulatory tailwinds and industry consolidation, supported by interest rates that remain well above zero.
The firm remains bullish on communications services, where portfolio manager Joshua Cummings said artificial intelligence could prove more pervasive and value-generating than markets currently expect. “We believe we could see further consolidation within the sector, as value and investor interest coalesce around the largest digitally native platforms best equipped to attract both content (supply) and users (demand).”
In healthcare, portfolio manager Andy Acker expects merger and acquisition activity to pick up in 2026 as cash-rich pharmaceutical companies seek to bolster pipelines through acquisitions of emerging biotech firms.
“We are excited about the potential for additional drug launches and promising clinical trials, even as we monitor risks such as uncertainty around the leadership of key government healthcare agencies. We continue to see opportunities across early commercial-stage companies with potential breakthrough products, as well as lower-risk, late-stage development companies that face less clinical uncertainty,” Acker said.
“Additionally, we see opportunities in medical device companies and managed care companies that trade at a discount to both historical averages and the market.”
Technology remains a core focus, with portfolio manager Denny Fish describing artificial intelligence as the most significant technology shift in a generation.
“Companies continue to invest rapidly in AI, and we believe they have no incentive to slow their spending as they work to meet surging demand and strengthen their competitive footing,” Fish said.
While early investment has centred on infrastructure and hardware, Janus Henderson expects investor attention to broaden to software and internet companies able to leverage AI to enhance productivity and competitive positioning.
