Institutional Investors Gird Their Portfolios in Anticipation of Turbulence in 2026, According to Natixis Investment Managers Survey

After three consecutive years of double-digit returns on most indexes, almost 8 in 10 (79%) North American institutional investors say that markets are due for a correction in 2026, according to survey findings published today by Natixis Investment Managers (Natixis IM). On average, North American institutional investors assign a 49% probability of a market correction (10–20% decline) and a 20% probability of a deeper correction (greater than 20% decline) in 2026.

Developed with CoreData Research, Natixis IM surveyed 515 global institutional investors in September and October 2025 who collectively manage $29.9 trillion in assets for public and private pensions, insurers, foundations, endowments, and sovereign wealth funds worldwide. Survey participants include 95 North American institutional investors responsible for managing over $6.79 trillion in assets.

Underlying these shifts are key economic risks North American investors are weighing against continued market opportunity:

• Investors fear geopolitical shock - especially with China: Geopolitical risk is a top concern for 43% of North American investors, with 75% saying political disfunction in major markets is a growing threat to market stability. Further, 71% say a realignment in global security will force investors to reevaluate their investment theses for certain countries. China remains a major worry—57% fear South China Sea conflict and 66% cite rare earth dominance—though 60% think markets will stay indifferent.
• AI fuels optimism, but bubble fears grow: Concern over an AI-driven tech bubble is rising, cited by 40% of North American investors (up from 25% in 2025). Yet optimism endures for tech, as 62% of North American investors expect the information technology sector to outperform the market and over half (55%) are bullish on Magnificent 7 stocks.
• Inflation fears resurface amid tariff uncertainty: Nearly half (47%) of North American investors think tensions between inflation and employment will force difficult Fed decisions. On the inflation side of the mandate, four in ten North American investors (40%) now see re-inflation as a key risk, up from 24% in 2025. Tariffs are adding to inflation worries, with 61% saying they are fueling renewed price pressures. Investors are somewhat split on whether the trade war will continue, with 56% saying it will rage on vs. 44% saying it will ease. On the labor side, two-thirds (66%) expect rising unemployment and a third (33%) believe labor-market weakness will accelerate rate cuts.
• Recession fears tick up, but still runway for rally: North American investors’ fears of recession ticked up from 20% for 2025 to 38% for 2026. However, six in ten (60%) see that the rally still has runway in 2026. Investors will be eyeing growth in 2026, as almost seven in ten (69%) saying that slow growth could be a harbinger of a recession.

“The outlook on 2026 is clouded for institutional investors,” said Dave Goodsell, Executive Director of the Natixis Center for Investor Insight. “After years of strong returns, risks that once felt distant are more tangible. With uncertainty surrounding geopolitics, growth, and inflation, investors are positioning portfolios to weather whatever conditions 2026 may bring.”

2026 Seen Favoring Active Strategies
For North American investors, top portfolio risks for 2026 are valuations (63%), inflation (54%), and concentration risk (43%), all up from last year’s outlook. Volatility concerns are also rising: 61% expect higher equity volatility and 39% expect more bond volatility. To manage these pressures and sustain returns, investors are leaning into diversification and active management, with nearly two-thirds (63%) expecting active strategies to be favored in 2026.

“Institutional investors recognize that 2026 will demand more nuance,” said Liana Magner, Head of Retirement and Institutional in the U.S. “With almost two-thirds saying their active strategies outperformed in 2025 — and a similar share expecting active approaches to be favored in 2026 — there’s a clear acknowledgment that today’s markets require more than passive exposure. Active management provides the discipline and insight needed to identify durable opportunities and build greater resilience into portfolios.”

Over seven in ten (71%) investors believe the 60:20:20 portfolio (equities: fixed income: alternatives) will outperform the traditional 60:40 mix:

• Equity optimism split amid concentration and consumer concerns: North American institutional investors remain cautiously optimistic on equities, with 69% expecting rate cuts to help push the S&P 500 higher. Confidence is strongest in defense stocks (81% bullish). Most (66%) expect gains to broaden, though 62% worry a significant new AI technological development could bring concentration risk to the forefront of equity markets. Top sectors expected to outperform the market include the IT sector (62%), energy sector (44%), and utilities sector (41%). Optimism is weakest for consumer-driven sectors—only 12% expect consumer discretionary to outperform—highlighting concerns over softening consumer strength in 2026.
• Fixed income outlook lifts on expected rate cuts: Nearly half (47%) of North American institutional investors expect inflation–unemployment tensions to force tough Fed decisions. Most anticipate rate cuts in 2025, with 57% expecting one to two rate cuts. This supports a cautiously positive bond outlook, with 58% bullish on fixed income. Even as 54% foresee higher corporate defaults, many are still adding investment-grade, high-yield, and emerging-market debt to secure income amid inflation uncertainty. In this environment, 68% say active management is essential for fixed income.
• Private markets remain favorable, but investors more discerning: Institutional investors are sharpening their focus on private markets in 2026, with 45% increasing allocations to private debt and 34% to private equity. Confidence runs high—67% are bullish on private equity and 63% on private debt—though 79% are applying greater deal scrutiny because of overcrowding concerns.
• Crypto gains legitimacy, but adoption remains cautious: Although 44% of investors now view crypto as a legitimate opportunity—up from 38% in 2025—only 20% currently have exposure. Looking ahead, 45% of North American investors expect to be invested by 2026. Still, four in ten current crypto investors plan to boost allocations next year. More than half (53%) believe more accommodative U.S. regulation will be a turning point for global adoption.

A key shift heading into 2026 is the growing trend among institutional investors to look outside of the U.S. for investment opportunities, driven by rising concerns about politicization. Globally, 63% say the politicization of U.S. institutions weakens the country’s investment appeal, a view shared by 57% of North American investors.

Global investors now lean slightly toward Europe (52%) over the U.S. (48%), yet most North American investors (60%) still expect U.S. markets to outperform. Even so, 68% expect stronger international performance and plan to diversify abroad, increasing allocations to Europe (30%), Asia-Pacific (34%), Latin America (22%), and especially emerging markets (38%). The shift underscores efforts to manage concentrated domestic risk while capturing new growth from supply-chain realignment and industrial policy.

A full copy of the report on the Natixis Investment Managers Institutional Investor 2026 Market Outlook can be found here: https://www.im.natixis.com/en-intl/insights/investor-sentiment/2025/institutional-outlook

Methodology
Natixis Investment Managers, Global Survey of Institutional Investors conducted by CoreData Research in September and October 2025. The survey included 515 institutional investors in 29 countries throughout North America, Latin America, the United Kingdom, Continental Europe, Asia and the Middle East.

About the Natixis Center for Investor Insight
The Natixis Center for Investor Insight is a global research initiative focused on the critical issues shaping today’s investment landscape. The Center examines sentiment and behavior, market outlooks and trends, and risk perceptions of institutional investors, financial professionals and individuals around the world. Our goal is to fuel a more substantive discussion of issues with a 360° view of markets and insightful analysis of investment trends.

About Natixis Investment Managers
Natixis Investment Managers’ multi-affiliate approach connects clients to the independent thinking and focused expertise of more than 15 active managers. Ranked among the world’s largest asset managers_¹ with more than $1.5 trillion assets under management_² (€1.3 trillion), Natixis Investment Managers specializes in high-conviction active investment strategies, insurance and pension solutions, and private assets, and delivers a diverse offering across asset classes, styles, and vehicles. The firm partners with clients in order to understand their unique needs and provide insights and investment solutions tailored to their long-term goals.

Headquartered in Paris and Boston, Natixis Investment Managers is part of Groupe BPCE, the second-largest banking group in France through the Banque Populaire and Caisse d’Epargne retail networks. Natixis Investment Managers’ affiliated investment management firms include AEW; DNCA Investments;_³ Flexstone Partners; Gateway Investment Advisers; Harris | Oakmark; Investors Mutual Limited; Loomis, Sayles & Company; Mirova; Naxicap Partners; Ossiam; Ostrum Asset Management; Seventure Partners; Thematics Asset Management; Vauban Infrastructure Partners; Vaughan Nelson Investment Management; VEGA Investment Solutions and WCM Investment Management. Additionally, investment solutions are offered through Natixis Investment Managers Solutions and Natixis Advisors, LLC. Not all offerings are available in all jurisdictions. For additional information, please visit Natixis Investment Managers’ website at im.natixis.com | LinkedIn: linkedin.com/company/natixis-investment-managers.

Natixis Investment Managers’ distribution and service groups include Natixis Distribution, LLC, a limited purpose broker-dealer and the distributor of various US registered investment companies for which advisory services are provided by affiliated firms of Natixis Investment Managers, Natixis Investment Managers International (France), and their affiliated distribution and service entities in Europe and Asia.

_¹ Survey respondents and publicly available data ranked by Investment & Pensions Europe/Top 500 Asset Managers 2025 ranked Natixis Investment Managers as the 20th largest asset manager in the world based on assets under management as of December 31, 2024.
_² Assets under management (AUM) of affiliated entities measured as of September 30, 2025, are $1,528.4 billion (€1,300.9 billion). AUM, as reported, may include notional assets, assets serviced, gross assets, assets of minority-owned affiliated entities and other types of nonregulatory AUM managed or serviced by firms affiliated with Natixis Investment Managers.
_³ A brand of DNCA Finance.

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed-income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided.

The views and opinions expressed may change based on market and other conditions. This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted. Actual results may vary.

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