Asset managers from coast to coast drop their new year outlooks every winter, offering investors plenty of thoughts and takes on the year to come. T. Rowe Price recently added its views this year’s outlook crop with some intriguing takes on equities and bonds, foreign and domestic. Here are three takeaways from the firm’s 2026 outlook for investors to consider.
AI Investing Remains Key, But Expect Changes
AI investing produced huge returns for investors in 2025, with the theme poised to continue playing a big role in 2026. That doesn’t mean 2026 will be the exact same as 2025, however. T. Rowe Price portfolio manager for the T. Rowe Price Technology ETF (TTEQ ) Dom Rizzo and credit analyst Mark Stodden point to a “new phase” for AI in the firm’s outlook.
The duo point to growing demand for monetization strategies within AI as a key transition point for companies in the space. Massive debt financing for the firms’ aggressive capex strategies, they say, will require new revenues sooner or later. While they still point to a bright future for the “biggest productivity driver since electricity,” the picture continues to change.
T. Rowe's High Conviction Bond Ideas: Low Duration, Inflation Bonds, Overweight Quality EM
Turning to fixed income, the company’s Head of Global High Yield and Chief Investment Officer, Fixed Income Paul Massaro and Head of International, Fixed Income Ken Orchard shared their thoughts. The pair explained that they do not see concerning trends in credit fundamentals. Looking ahead, however, they see opportunities in areas like long duration government debt, sub-investment grade bonds, and inflation-linked debt.
“Despite the tight spreads, sub-investment-grade bonds and bank loans are on track to provide yields that remain attractive versus long‑term equity returns,” they wrote. “Inflation protected bonds in the U.S. as well as some European countries and Japan represent attractive value, with those markets underpricing our anticipated inflation.”
2026 Outlook: High Valuations Loom; Points to non-U.S. Equities, Local Currency Bonds
T. Rowe Price capital markets strategist Tim Murray argued in the company’s 2026 outlook that extended, high valuations among U.S. equities may drive investors abroad. Citing the company’s Asset Allocation Committee view, Murray pointed to an overall preference for stocks over bonds due to inflation risk. Within equities, he also wrote, international and small-cap equities stood out the most.
“While we are neutral on growth versus value stocks in the U.S., in international equities we prefer value companies,” Murray wrote. “The global cyclical backdrop is improving, and sectors such as financials—heavily represented in value indexes—should benefit from steeper yield curves and improving loan demand. Valuations for non‑U.S. value stocks also remain relatively attractive.”
The year offers notable opportunities, then, but also areas that may be potentially better avoided. Active ETFs can leverage insights like those in the 2026 outlook and managers’ own, fundamental-research driven takes. For those looking at options to take advantage of the new year, active ETFs like those offered by T. Rowe Price may appeal therein.
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