(MENAFN- Khaleej Times)

Investment strategies across the Middle East are entering a pivotal phase as global markets brace for a year defined by technological disruption, monetary divergence, and structural reforms. Regional investors, particularly in the UAE, are expected to lean into diversification and active management as they navigate a landscape where artificial intelligence (AI), private credit, and multi-sector fixed income dominate global conversations.

The GCC, home to sovereign wealth funds with trillions in assets, is increasingly aligning with global themes while tailoring allocations to local priorities such as infrastructure and energy transition. With oil revenues still underpinning fiscal strength, regional portfolios are seeking exposure to sectors that promise resilience and growth beyond hydrocarbons. This includes AI-driven technology platforms and healthcare innovation, both of which are forecast to deliver outsized returns globally. For UAE-based investors, the emphasis is on pairing these growth engines with defensive strategies - such as securitized fixed income and structured private credit - to mitigate volatility amid geopolitical uncertainty.

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According to Janus Henderson's Market GPS Investment Outlook 2026, the coming year presents“a meaningful opportunity set for active investors” as AI adoption accelerates and fiscal reforms reshape Europe. The report underscores six major themes: AI as a sustainable catalyst, biotech-led small-cap resurgence, European equity re-rating, securitized fixed income for yield resilience, multi-sector bond strategies, and structured private credit.

AI remains the standout secular trend.“Unlike the dot-com era, today's valuations are supported by profitability and demand,” the report notes, highlighting hyperscalers and infrastructure providers as long-term winners. For Middle Eastern investors, this translates into strategic stakes in global tech leaders and regional ventures leveraging AI for logistics, finance, and energy optimization.

Healthcare, particularly biotech, is another bright spot. After years of underperformance, the sector is rebounding on the back of regulatory clarity and surging M\&A activity - biopharma deals more than doubled in 2025, reaching an annualized value of $227 billion. With large pharmaceutical firms facing a $300 billion patent cliff, smaller biotech companies are poised for acquisition, creating opportunities for active managers.

On the defensive side, fixed income strategies are evolving. Securitized assets - such as mortgage-backed and asset-backed securities - offer high credit quality and low correlation to equities, making them attractive amid tight corporate spreads. Multi-sector bond funds, which allow managers to pivot across credit quality and duration, are gaining favor for their ability to balance interest-rate and credit risk in volatile environments.

Private credit continues its meteoric rise, but structure - not scale - is the differentiator. Asset-backed finance, which ties loans to tangible collateral, is emerging as a preferred approach for investors seeking transparency and resilience.“Resilience does not come from yield alone; it comes from deal structures,” the report emphasizes, pointing to layered protections and real-time monitoring as critical safeguards.

For Middle Eastern allocators, these trends reinforce the case for active management and thematic investing. AI and biotech offer growth, while securitized fixed income and structured private credit provide ballast against macro shocks. With global monetary policy diverging - rate cuts in Europe and the US contrasting with localized tightening elsewhere - flexibility will be key.

As the UAE cements its role as a financial hub, expect regional portfolios to mirror global best practices while capitalizing on local strengths. The overarching message for 2026: embrace innovation, prioritize structure, and stay agile in a world where opportunity and risk are increasingly intertwined.

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