Five themes offer durable value beyond the headlines

MARKETS in 2026 are being shaped by forces that reward careful thinking over reactive positioning. The artificial intelligence revolution is maturing; private markets are gaining relevance; and a new municipal bond bull market is quietly taking hold.

Meanwhile, real estate is stabilising and energy demand is reshaping infrastructure investment across asset classes.

Against this backdrop, we see five themes we believe deserve investors’ attention this quarter. They present opportunities to look beyond headlines towards where durable value is being built.

Don’t bet against the US in bid for diversification

While we certainly wouldn’t argue against regular portfolio rebalancing, we also think some investors may be overlooking positive US trends.

The AI boom’s initial phase may be pausing, but it is far from over. Rising productivity, solid earnings growth, and favourable tax and regulatory policies should provide continued tailwinds for US assets.

Beyond equities, stronger growth and a diversified economy offer compelling US opportunities in private markets such as real estate, private credit, private asset-backed finance and private investment-grade bonds.

Alternative credit and private equity should be core allocations

We believe many investors remain underweight in private markets. Additional liquidity risk may deliver enhanced returns, income and diversification.

Opportunities span alternative credit beyond traditional fixed-income benchmarks, including public and private securitised assets, real estate and infrastructure debt, collateralised loan obligations and Commercial Property Assessed Clean Energy financing.

Headlines question private credit’s stability and potential industry risks. We see underwriting and deal structure issues in riskier segments, but attractive opportunities remain when strong underwriting and deal selection are at the forefront in the investment process.

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In below investment grade, we favour middle-market direct lending. Private investment-grade credit offers strong relative value, limited supply and robust cash flows, particularly in private asset-backed securities.

Private equity also looks compelling. Mergers and acquisitions activity has been rising across the world, and tougher fundraising means experienced managers are deploying capital wisely.

We favour senior over junior capital and prefer secondary markets with single-manager structures. Across all areas, selectivity and partner choice will prove critical. Deal structure and covenants matter more than in recent years.

US municipals in the early stages of a new bull market

Following a challenging 2025, US municipal bonds have rebounded in early 2026 – a trend we expect will continue. While issuance remains elevated, rising redemptions and coupon repayments, plus increasing demand from investors redeploying cash into real income, create a strong technical backdrop.

Yields are relatively high and fundamentals strong, with state and local governments looking very healthy. Municipal yield curves are steeper than US Treasuries, making this an area where duration risk makes sense. We see compelling opportunities across both high-grade and high-yield municipals.

Private real estate rebound is just starting

Following a few years of falling prices, pockets of oversupply and weak demand amid rising interest rates, there was a rebound in value and constrained new supply for private real estate markets in 2025. Demand and transaction activity have also started to accelerate as investors recognise growing opportunities.

In fact, global private real estate returns have trended positive for seven consecutive quarters. Rising transaction volumes and plummeting new construction contributed.

Critically, price improvements have occurred mostly from rising income growth. Capital appreciation of the underlying assets has not yet been a force, but we expect that will pick up, providing an additional tailwind.

Second-derivative trades from AI boom

US mega-cap tech and data centres led the early stages of the AI boom. While that rally has started to show some cracks, we hardly think AI growth and the associated rise in energy demand has ended. But we think investors should be looking for the secondary and future implications of these trends.

Broad infrastructure investments including utilities and energy transmission should benefit from increased energy needs. AI growth and energy transformation may also create direct or indirect opportunities in asset-backed securities, real estate and municipal bonds tied to infrastructure buildouts.

And despite US political headwinds, the global shift towards renewables and efficiency continues to drive investment opportunities as diverse power sources become essential.

Over the longer term, we think investors should pay attention to even broader AI and energy-related trends and risks.

Issues such as the need to upgrade and build new power grids, the manner in which data centre growth intersects with water stress and scarcity, and how the growing use of AI affects employment trends and corporate governance policies all bear watching.

The backdrop supports a selective approach across asset classes. With disciplined underwriting and a focus on income, investors can seek near-term opportunities while staying positioned for longer-term growth.

The writer is chief investment officer of Nuveen