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Key takeaways:

  • Easing inflation and rate cuts create renewed tailwinds for quality growth—especially midcaps poised for earnings and multiple recovery.
  • Market leadership should broaden beyond mega-cap technology, lifting selected underappreciated European growth areas and undervalued health care innovators.
  • Artificial Intelligence’s (AI) next phase is shifting from infrastructure builders to integrators. Companies embedding AI into products and operations unlock new profit pools despite near-term volatility.
     

Setting the stage

The past several years have witnessed extraordinary technological and economic shifts. The proliferation of AI has transformed business models and driven investor enthusiasm, propelling a small group of dominant United States companies—most notably the “Magnificent Seven”—to outsized market leadership. In contrast, European equity markets, with their heavier weightings in financials and consumer sectors and lighter exposure to technology, have favored value-oriented segments.

However, as we approach 2026, the market environment continues to evolve. Trade policy uncertainty, geopolitical tensions, and supply-chain realignments have tested corporate resilience and investor confidence. Cost pressures remain elevated and businesses have been forced to adapt to a fragmented and dynamic operating environment. Yet, amid this complex backdrop, we remain focused on what has long defined our investment discipline: Owning high-quality growth companies with durable competitive advantages. This steadfast approach—research-driven, benchmark-agnostic, and risk-aware—continues to be our guide in pursuing sustainable alpha across cycles. As we look ahead to 2026, we see several reasons for optimism for active growth investors.

Discipline, quality, and long-term vision

Looking toward 2026, markets seem to be transitioning from a narrow, liquidity-driven regime to one shaped by fundamentals, innovation, and active management. For growth investors, this could be a welcome rebalancing. We believe the coming years will reward investors who can distinguish durable innovation from cyclical enthusiasm. Our team continues to invest on behalf of our clients with patience, discipline, and diligence—qualities that have defined our process for over two decades.

WHAT ARE THE RISKS?

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Equity securities are subject to price fluctuation and possible loss of principal.

Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks.

Investment strategies which incorporate the identification of thematic investment opportunities, and their performance, may be negatively impacted if the investment manager does not correctly identify such opportunities or if the theme develops in an unexpected manner. Focusing investments in the health care, information technology (IT) and/or technology-related industries carries much greater risks of adverse developments and price movements in such industries than a strategy that invests in a wider variety of industries.

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