Portfolio Building

Chief Investment Officer Sean Taylor reviews a strong second quarter for emerging markets, where AI and reindustrialization were key drivers of investor returns.

Investors are often drawn to healthcare for its innovation and long-term growth potential. Yet in practice, allocations are often concentrated in a few large pharmaceutical companies, whether through direct stock picking or index weightings.

The small-cap stock rally we highlighted back in April has continued over the past few months, driven by factors such as robust U.S. economic growth disproportionately benefiting smaller, domestically focused businesses and the AI capital spending boom spreading to smaller tech and energy companies.

ClearBridge Investments: Although markets often pause to digest after large gains, history suggests these episodes usually prove fleeting, meaning major indexes could move higher in the second half of 2026.

Markets move on data, earnings, interest rates, and economic conditions. But they can also be heavily influenced by human behavior. Even experienced investors can fall into emotional or psychological patterns that affect decision-making, particularly during periods of uncertainty or market volatility.

For much of the last decade, investing felt relatively one dimensional. Falling inflation, near zero interest rates and abundant liquidity rewarded long duration growth assets, compressed dispersion and made passive exposure difficult to challenge.

The June jobs report underscored our thesis that while the labor market remains in the 'economic plus column,' some of the prior months' increases in new hiring seemed a bit too high.

Over the first half of 2026, markets faced some expected — and unexpected — tailwinds and headwinds, ranging from geopolitical developments, blockbuster corporate earnings, increasing artificial intelligence (AI) scrutiny, resilient economic data, and a new Federal Reserve (Fed) Chair.

The capital markets have become an increasingly complex space for investors, complexities that are heightened by the sheer number of ways one can invest.

Model portfolios are seeing billions in inflows, and part of that success may be from how these strategies implement ETFs and private assets.

Royce Investment Partners: In this second quarter recap, Francis Gannon discusses how US small-and micro-cap stocks have continued to lead the US equity market in a robust period for equities.

Stocks staged a powerful recovery in Q2. The S&P 500 gained 15% and closed near record highs as oil round-tripped back to pre-conflict levels, AI enthusiasm returned, and the rally broadened well beyond the handful of names that led the market for three years.

AI may reshape the labor market in ways that are difficult to predict, and it won’t be the first time this has happened. In the short term, the labor market appears to have stabilized and there are some early signs of acceleration.

Chris Galipeau discusses high-conviction insights that go beyond media headlines.

Higher rates, weaker underwriting, and software concentration are exposing vulnerabilities in direct lending and leveraged loans, while high yield bonds appear better positioned.

The S&P 500’s recent advance is masking a more dynamic story for US equity investors. Market winners remain confined to a tight clique of AI-related technology stocks, yet more companies are showing attractive fundamentals. For active equity investors, we believe this points to a more diversified and differentiated opportunity set ahead.

Close to 40 years ago, I moved from Canada to the U.S. after acquiring a controlling interest in U.S. Global Investors. I’ve built my entire life and career here, and in all that time, I’ve never stopped marveling at my adopted country.

Bypass the headaches of individual closed-end funds. Discover how Invesco's PCEF bundles over 100 CEFs to capture June's debt rallies.

While the Federal Reserve left interest rates unchanged at the latest meeting, investors increasingly speculate that rate hikes are on the table in 2026.

The most interesting shift in market price action in June was the strong outperformance of value stocks compared to the broad market and tech

A growing share of central bankers argue that artificial intelligence will ultimately push neutral interest rates higher. Intuitively, if AI boosts productivity and lifts long-run growth, then households have less incentive to save, pushing up the real neutral rate.

Six months is enough time for a lot to change. Your income, your expenses, your goals, and even the broader economy may look different than they did at the start of the year. And a plan that made sense in January might not fit the reality you're living in now.

Midway through 2026, Franklin Templeton Institute’s Global Investment Outlook framework remains a valuable lens—but the landscape has shifted.

The war in Iran has delivered an oil shock into a bond market that had not fully shaken inflation pressures. Higher energy prices have revived concerns about the path of inflation just as central banks were edging toward rate cuts, forcing a reassessment of what investors require to hold long-term bonds. That reassessment is now playing out in higher long-term yields and steeper yield curves globally.

AI-related disruption, asset valuations and borrower stress have put private credit under a microscope lately. Is this a market facing its first major test after a decade of rapid growth? If it is, we expect it to pass comfortably.

The Federal Reserve left interest rates unchanged at its June 17 meeting, but investors were more focused on the future under new Fed Chair Kevin Warsh, whom Trump appointed in May.

Federal estate taxes may not affect most households, but state death taxes can still be significant. Learn key planning considerations and strategies to help preserve wealth.

The strong run by the Nasdaq-100 and the S&P 500 the last few years has loaded portfolios with heavy concentration risk. As a tiny group of mega cap tech giants shapes the market, finding meaningful diversification has become a priority for advisors. Data from last week’s VettaFi Mid-Year Market Outlook Symposium confirms that wealth managers are actively looking down the market-cap spectrum to rebalance risk.

The dollar holds a central place in global markets due to its role as the world’s reserve currency. Its movements influence cross-asset correlations, shape liquidity conditions, and often offer early indications of shifts in the broader macro regime. In short, it is a critical variable that warrants close attention.

Today’s market backdrop reflects a tension between expectations and reality. Despite higher oil prices and plenty of geopolitical noise, the US economy remains resilient and durable, supported by steady consumer spending, a labor market finding its footing, ongoing fiscal support and a surge in AI and infrastructure investment.

The second quarter wraps up today, and it was a good one. With the S&P 500 having returned more than 14% (including dividends) with just one trading day left, it will almost certainly end up being the best quarter for the index since the second quarter of 2020. Technology was the leader despite the June weakness.

The Mag 7 has been the single largest driver of the stock market’s performance three straight years, accounting for over 20% of the S&P 500’s performance. However, there is a performance divergence happening in 2026 as the S&P 500 continues to go up, while the Mag7 go down.

A look at the resilient global economy, evolving market opportunities, and key risks shaping the investment outlook.

At first glance, allocating to emerging markets appears to add diversification to a portfolio. Look more closely, and the reality is more nuanced. In the late 1990s, the MSCI EM index was dominated by materials and telecoms, driven by the growth of mobile telephony and the internet bubble.

June saw strong market fundamentals once again in conflict with macroeconomic uncertainties, creating a choppy market. While a durable peace plan with Iran is seemingly underway, investors have regarded the negotiations with caution, pricing in potential setbacks.

Markets may have ended the first quarter with a thud, but stocks put another record run in the books to close out the first half of 2026. The U.S. ETF market had already shattered records, crossing the $15 trillion threshold and cruising past $1 trillion in net inflows right before summer officially began.

While the Middle East is still far from calm, it does appear the worst of the volatility in the region is in the past. The U.S.-Iran ceasefire is in place, with negotiations underway for a more durable peace.

A strong quarter across major indexes. The second quarter is winding down and what a quarter it has been with the S&P 500 up 12.6% quarter to date, while the Nasdaq-100 and Russell 2000 are both up over 20%. Despite some twists and turns, the path of least resistance for stocks broadly remained up and to the right for much of the last three months.

Startup equity decisions often happen before a founder has a full advisory team in place. Formation documents get signed, vesting schedules are approved, and the tax consequences may not feel urgent because the company is still young.

In our view, this divergence continues to reflect how the buildout of artificial intelligence (AI) is influencing both the economy and markets as it progresses across the value chain, even as the associated costs continue to climb.

Insurance investors face a broader opportunity set than ever across public and private credit—from corporate lending to asset-based finance. But those investments come in many forms. In our view, a all-encompassing approach can better assess relative value, pivot to new avenues and align investments with portfolio, liability and regulatory considerations.

Chris Galipeau discusses high-conviction insights that go beyond media headlines.

Despite strong gains in 2026 so far, commodities have remained supported by constrained supply, resilient demand and long investment lead times, pointing to a cycle that seems to remain fundamentally intact.

A widening confidence gap in non-traded investment vehicles is testing private credit valuations, sharpening the case for manager selection and diversification beyond direct lending.

It’s hard to believe we’re nearing the halfway point of 2026 – and what an eventful start it’s been. Markets have pushed through a geopolitically driven energy shock, rising inflation pressures and accelerating disruption from the artificial intelligence boom.

The top 10 active ETFs YTD by fund flows show some intriguing trends and successful names that may pique the interest.

The dominant theme this week was a tug of war between improving macroeconomic conditions and weakness in parts of the technology sector.

From our experience participating in Fed meetings, we know that the dot plot has never been universally embraced within the institution. The concern was not that it lacked informational value, but rather that markets interpreted it as a forecast, which was never its intended purpose. Forward guidance is meant to shape expectations and influence behavior, not to serve as a firm prediction of future policy decisions.

Circumstances since 2020 have repeatedly demonstrated how adaptable the economy is in the face of new challenges. We see no reason for that resilience to fade in the balance of the year.

The AI boom goes from strength to strength. Big technology companies are pouring hundreds of billions of dollars into chips, data centers and power-hungry infrastructure. One estimate puts annual AI infrastructure investment above $650 billion in 2025 and potentially over $800 billion in 2026..

Model portfolios have helped many advisors solve for scale. The next challenge is more nuanced: how do advisors keep that scale while delivering more personalization, tax awareness and differentiated value to clients?

Private credit is having a moment in the headlines. Higher interest rates and a pullback in certain types of bank lending have pushed more financing activity into private markets. Investors may be left with a simple question: What exactly is private credit?

In a world of high starting yields and rupturing economic alliances, investors who actively diversify across regions, sectors, and currencies can be better positioned to pursue durable returns.

As the market continues to broaden in 2026, a balanced approach matters more than ever.

AI is both a foundational technology and the ultimate replacement product, which we believe explains why it has attracted unprecedented levels of capital and why the investment opportunities are so compelling.

New Fed Chair Kevin Warsh is already reshaping policy communication by reducing forward guidance, questioning the dot plot’s future and emphasizing real-time data, potentially increasing Treasury market volatility.

VettaFi currently has index products tied to ETFs issued by American Century, Victory Capital, and ALPS ETFs, but the addition of RAFI products issued by Invesco and PIMCO that are fundamentally weighted is really exciting, according to Rosenbluth.

What if the debt crisis investors have feared is not still ahead, but already here, unfolding in plain sight? In his June insight, Richard Bernstein, Global Head of Macro & Customized Investing, makes the case that the market may already be penalizing U.S. fiscal excess, not through a dramatic collapse, but through a slow burn with real consequences for investors and the broader economy.