As we look towards Q3 and Q4 of this year, Portfolio Adviser asked four heads of distribution at asset management firms where they have seen the most significant shifts in client allocations over the first half of the year, and what’s driving them.
Are there asset classes or strategies experiencing notably stronger or weaker demand than they anticipated at the start of 2026?
Jonathan Schuman, head of international at Thornburg Investment Management
As we speak with our partners and clients across the UK, Europe, Latin America, and Asia Pacific, the most notable shift year to date is toward caution regarding private credit.
Redemptions and gating of certain funds appear to have made allocators reluctant to rely just on education and disclosure.
Rather, they are increasingly questioning whether product structure should better match underlying liquidity.
In equities, one pronounced shift is addressing the US tech/growth concentration risk in clients’ equity portfolios.
There is a growing appetite for global equity portfolios that truly diversify that exposure, and this is where allocators see real value in active management. On a more nuanced level, we notice efforts to balance quality-growth or quality-at-any-price exposures with quality-value strategies in client portfolios.
Within fixed income, there has been a shift from conversations focused on investment grade credit towards more flexible bond strategies. This again is an area of strength for an active manager.
The attention on flexible bonds also seems to reflect divergent views about the attractiveness of real yields and compensation for credit risk in the current environment. In some cases, to move client cash ‘off the sidelines,’ allocators appear to be bypassing fixed income and focusing instead on dividend equity strategies, where the combination of current yields and capital growth potential is more attractive.
Rob Hall, head of UK wealth at PGIM
In the first half of the year, client allocation shifts have been defined by a clear search for resilience, flexibility and discipline across both fixed income and equities.
Demand has increased for multi-sector credit strategies, as clients look to experienced and deeply resourced teams to make credit decisions, adjust portfolios and respond to opportunities as markets move.
The primary driver for this has been bond market volatility. Spread events are happening faster and with more force than in prior periods. In that environment, there is clear appeal for a best ideas, multi-sector credit approach that can move across opportunities and focus on the most compelling ideas.
That has become even more relevant against a backdrop of uncertainty, geopolitical risk and a difficult macro environment.
Clients are also showing greater interest in securitised products, particularly higher-quality AAA CLOs. These have become more widely used not only because of regulatory changes, but because they offer characteristics investors value in volatile markets, including diversification, low correlation to global aggregate bonds, negative correlation to Treasuries and attractive yields.
AAA CLOs have also delivered strong recent total returns, at times outperforming most other fixed income assets, which has helped reinforce the case for its role in portfolios. Being at the top of the capital structure, AAA and AA-rated CLOs have never seen a default and that risk remote attribute is attractive to clients in this environment.
In equities, the shift has been more nuanced and subtle. Clients are moving toward lower tracking error, enhanced beta equity strategies, specifically those that sit at the intersection of fundamental and quantitative investing. These approaches allow clients to pursue active alpha generation while maintaining quantitative guardrails.
Overall, clients are looking for a broader toolkit to help manage a more complex market environment, from multi-sector credit and higher-quality CLOs to enhanced beta strategies in equities.
Warren Tonkinson, head of distribution at JO Hambro
Over the course of the past 12 months we have seen strong interest in global and emerging market equities as clients rebalance their equity portfolios.
In particular there has been a global shift away from US into international strategies as clients look to diversify their portfolios more broadly.
In addition, the UK remains an area of interest given the good value it
We are having more active and detailed analysis of markets and the relative exposures as clients seek to identify risks and opportunities.
The active and passive debate continues but given the volatility and uncertainty in markets our clients are looking more closely at allocating to active managers who can help navigate during this period and diversify against some of the characteristics of the underlying markets.
We have always seen strong demand for active equities run by specialist fund managers.
Nataline Terry, head of EMEA distribution at T. Rowe Price
One of the most noticeable trends this year has been the ongoing demand for outcome-oriented solutions.
Clients are increasingly looking at our multi-asset offering, either as more bespoke model portfolios or unitised structures – alongside retirement income and decumulation solutions.
We are also seeing stronger demand for lower-cost active solutions that can sit at the core of portfolios. Clients want lower tracking error and consistent performance, alongside access to genuine alpha.
That is generating interest in enhanced indexing strategies, such as our Structured Research Equity vehicles and our Integrated Equity solutions, which combines the best ideas from our quant and fundamental capabilities.
Selectors are becoming more focused on products that are ‘true to label’, and capable of delivering consistent outcomes for the core holding within a portfolio.
The conversation has become more strategic and more bespoke. Our discussions remain focused on how we can deliver value through active investing, particularly around how investors can access diversified sources of return within defined risk budgets.
There is also continued interest in how active managers can help address concentration risk that has emerged in areas of passive investing.
