PORTFOLIO OBSERVATIONS ENTERING 2026

Based on our direct observations of how family office and UHNW investors are positioned coming into 2026, there are several notable observations:
  • Portfolios have become exceptionally concentrated in a small number of technology and AI-related shares. Alongside managed portfolios, many investors have doubled down.

  • Portfolios are underexposed to less correlated industries, such as healthcare, where shares that have recently performed poorly. Similarly, the percentage of assets held by US investors in non-US shares has fallen overtime. The fact that the dollar has performed poorly (and is likely to continue to do so) has not changed allocations.

  • The bond market has performed decently in 2025, with global bonds returning 4.4% year-to-date. We see some compression of long-term equity and bond returns toward closer levels as risk premia have come down.

  • We do not use high yield fixed income as a “safe asset.” Rather, we use high yield as a substitute for what would otherwise be a larger global equities overweight.
  • As discussed below, we aim to be highly specific in delineating growth and income assets.

  • Performance of more recent vintages of established private equity and venture capital funds have lagged public market returns and the expected return of capital from older funds has markedly diminished. The expected premium for illiquidity has often not been achieved.

  • Typical portfolios contain average cash balances in excess of 8% of total portfolio value. The average yield on these portfolios is 2.6%, far less than what could be earned even after Fed rate cuts. The drag on portfolio returns from underinvestment and poor yields has a negative compounding impact.

  • Fund expenses and overall fee loads for portfolio management vary widely with ample opportunity for improvement. Turnover remains low, even in circumstances of underperformance.

These conditions suggest that client portfolios can be reoriented to reduce risk and expose capital to sectors more likely to drive above-average returns on a go forward basis.

3 STEPS TO ACTIVE ASSET ALLOCATION

We believe investors need to understand the true sources of economic growth. Breakthroughs in technology and improvements in the organization of resources have solely driven increased per-capita living standards since the Stone Age.


LEARN MORE
CIO_LINKEDIN_Business_Banner_1584x396-px_D

DEEP DIVE INTO ALTS, VC & DIGITAL ASSETS

 

LEARN MORE

SUMMARY OF OUR US ECONOMIC OUTLOOK FOR 2026

 

LEARN MORE

The Outlook for 2026 & Beyond

LEARN MORE

Contact the team at The CIO Group

 

 

GET IN TOUCH
Source: Haver Analytics  CIO Capital Group LLC is an SEC-registered investment adviser. This material is for informational purposes only and does not constitute investment advice or recommendations. All investing involves risk, including potential loss of principal. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially. Past performance is not indicative of future results. For additional information about CIO Capital Group LLC, see our Form ADV Part 2A at www.adviserinfo.sec.gov.