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Hi, I am Kristy Akullian, and I am excited to introduce our 2026 Year Ahead Investment Guide. 
The new year brings a market characterized by above-trend growth, easing policy, and accelerating productivity. We believe this backdrop favors risk taking, but weakness in the labor market, rich valuations, and an uncertain forward path for interest rates remain risks, arguing for greater selectivity.
Let’s dive in. 
Bonds reemerged in their traditional role as ballast in portfolios in 2025, though the relationship between stocks and bonds remains less stable than in prior decades. We believe the intermediate portion of the yield curve – or the belly – provides an appealing mix of ballast and income. We also see emerging market bonds presenting a compelling source of income, supported by a weaker U.S. dollar, easier global financial conditions, and improving sovereign balance sheets.
Across asset classes, AI remains the dominant theme for investors , as it catalyzes a capital-intensive expansion, boosting productivity and sustaining earnings strength. In U.S. equities, we also see fundamentals improving in non-AI portions of the market as earnings growth across the S&P 500 strengthened meaningfully in 2025. 
Still, the prevalence of the AI theme within investor portfolios – whether they’ve intentionally allocated to the theme of not – introduces risks of higher concentration and correlations. We see a variety of ways to seek diversification:

• International equities, specifically emerging markets in Asia, can help investors diversify within AI, while those wanting to diversify outside of the AI trade may also consider developed market strategies, which tend to have a tilt towards value and lower earnings volatility, or pay out dividends.
• Additionally, to address concentration risk and the reduced hedge reliability of traditional assets, consider what we call a diversified diversifier using alternative strategies and asset classes that have had a low correlated to stocks.

Finally, while easing policy rates should prove a boon to risk assets broadly, this can present challenges for income-oriented investors. We believe investors should take a whole portfolio approach to income: with a range of solutions from bonds to options income or dividend strategies .
For a deeper dive into our outlook and relevant product ideas, head over to iShares.com or BlackRock’s Advisor Center to read the full Year Ahead Investment Directions.