- AJ Bell’s Strategic Asset Allocation (SAA) for 2026 outlines the changes made to AJ Bell’s range of investment solutions, including its funds and Managed Portfolio Service (MPS)
- AJ Bell’s assets under management increased by 31% in FY25 to a record £8.9 billion
- Greater global diversification in a number of sectors has underpinned the team’s allocation strategy for 2026
- Bond allocations have been diversified beyond the UK
- US sector opportunities used as concentration risk rises in global markets
A full copy of AJ Bell’s SAA 2026 brochure can be found here.
James Flintoft, head of investment solutions at AJ Bell, comments:
“Over the past year, investors of all stripes have been grappling with the febrile geopolitical environment which has posed plenty of questions for portfolios. As we plunge into 2026, the importance of diversification feels as pronounced as ever, and it remains at the core of our investment philosophy.
“Our latest allocation changes reflect a commitment to prudent risk management and ensuring our portfolios are robust across a range of market scenarios. We’re building for resilience and opportunity, not just following the headlines. The rationale and process behind our allocation for 2026 is outlined below.”
Bond allocations to head off volatile inflation
“For 2026, we’ve introduced GBP-hedged Global Government and Global Corporate bond asset classes, offering attractive yields with lower volatility than UK gilts. Bond diversification now expands across Europe, particularly Germany and France, while avoiding markets such as Japan and China.
“As we saw with the UK Budget, politics can create a significant amount of noise in the market and holding a broader spectrum of government bonds can help mitigate such volatility.
“Cash has been reduced in favour of government bonds, with a tactical tilt toward inflation-linked bonds in the UK and US (index-linked gilts and US TIPS). Money market funds and cash equivalents remain a key anchor for lower risk portfolios, but government bonds now offer more compelling yields.
“Inflation looks to be much more volatile than it was throughout the 2010s and that erodes the return received from bonds, however inflation-protected bonds help mitigate this risk.”
Recognising concentration risk in global markets
“Recognising the rising concentration risk in global equity markets, where a handful of US-based technology giants dominate global indices, we’ve enacted changes to maintain diversification as the AI theme spreads globally.
“By adding dedicated sector positions in the US, portfolios are better placed to weather volatility and capture opportunities from technological innovation, including AI. In the US, defensive sectors such as Health Care and Utilities offer good value and plenty of potential for AI to improve productivity. These have been combined with the more cyclical equally weighted S&P 500 and the US Energy sector, which offers a combination of low valuations and an increasing appreciation of the energy needed to keep the global economy on track.
“UK equities remain a core pillar of the asset allocation owing to valuation and the different sector makeup to the global market. We allocate to larger companies in the UK, which offer good exposure to the global economy.
“After a very strong 2025 we’ve lightened our allocations to Emerging Markets ex China, where AI has been a very strong theme in Korea and Taiwan. In Europe, after increasing our allocation this time last year, we’ve pared back the region. Valuations in the region increasingly appear to reflect the optimism of the surprise defence and infrastructure spending announced in 2025, however some value remains, especially from a diversification perspective.”