Nedgroup Investments Media Roundtable: “Not another outlook”

With consensus views already established for 2026, Nedgroup Investments gathered journalists in London for a different kind of outlook, focused on underappreciated opportunities, crowded assumptions and risks investors may be too relaxed about.

“Most outlooks have already been published, absorbed and priced in,” Apiramy Jeyarajah, Nedgroup Investment’s chief commercial officer, told journalists as she opened the firm’s media roundtable, held in London on February 3. “Consensus has formed, narratives have hardened and the same assumptions are being repeated.”

Titled “Not another outlook”, the event aimed to instead highlight less conventional thinking. Rather than presenting a house view, members of Nedgroup’s investment team were asked to focus on risks, opportunities and structural trends that could be underappreciated, misunderstood or mispriced.

Three themes framed the discussion: underrated narratives, overrated assumptions and wildcard scenarios, a format intended, as Jeyarajah put it, to dig into “what the market may be missing, and why that matters in 2026.”

Underrated: The opportunities many investors overlook

The conversation began not with an investment call, but with a challenge to the industry itself.

Tom Caddick, managing director for the international business, argued that the most underserved client need is not a new product or strategy, but the “core” of portfolios.

“As an industry, we tend to assume people are looking for excitement; the next shiny thing,” he said. “But most investors need their core portfolios to do something very simple: deliver what they say they will, consistently, over time.”

From there, the focus shifted to fixed income, where David Roberts, manager of the Nedgroup Investments Global Strategic Bond Fund, argued that a structural change is underway. For decades, bond markets could look through politics and focus more on long-term fundamentals. That is no longer the case.

“Politics now has a much greater influence on bond markets,” he said, pointing to the growing divergence in global monetary policy. “We no longer have a world where everything moves in sync with the Fed.”

That fragmentation, he argued, is creating opportunities. Markets such as Australia, which have moved further along the tightening cycle, are beginning to look more attractive. In the UK, gilts appear cheap relative to the economic backdrop, even after adjusting for political risk.

By contrast, he described parts of the corporate bond market as expensive. “The opportunity set today is less about broad beta and more about exploiting regional policy differences and avoiding the weakest credits,” he said.

On the equity side, product specialist Nisha Thakrar challenged another dominant narrative: the idea that investors must choose between the US and Europe.

“The current consensus trade – ‘Sell America, Buy Europe’ – is too binary,” she said. While US mega-caps are expensive and highly concentrated, broad regional calls can swing performance sharply in either direction. In a world defined by uncertainty, she argued a global bottom-up approach can be more effective than top-down geographic positioning.

Thakrar also pointed to changes in US market structure, including the rise in retail participation and passive flows, which have left many mid- and small-cap companies under-researched and under-owned. That, in turn, can create opportunities for active managers.

One area she pointed to as particularly compelling is specialty chemicals. While commodity chemicals face cyclical headwinds, specialty chemicals benefit from innovation, sustainability trends and high-margin niches. 

“These businesses are often deeply embedded in their clients’ operations,” she said, citing distributors that provide formulation expertise and regulatory support. “Those sticky, service-led revenues are often undervalued by the market.”

Madhushree Agarwal, portfolio manager in the multi-manager team, rounded out the “underrated” discussion by turning to an underappreciate source of portfolio diversification. She argued that direct infrastructure deserves more attention as a defensive asset.

“When investors think defensively, they often default to bonds, gold or property,” she said. “Infrastructure sits just outside that mental list, but it provides exposure to essential services that people use regardless of the economic cycle.”

Often benefiting from inflation-linked revenues, long-term contracts and favourable regulatory frameworks, Agarwal argued infrastructure offers return drivers that differ from both equities and traditional bonds. “It doesn’t always grab headlines,” she said, “but it can be a very valuable diversifier.”

Overrated: Where consensus thinking has gone too far

If some parts of the market are overlooked, others may be receiving too much support from investors.

Thakrar turned attention to the idea of “quality” investing. “Quality has been rewarded for many years,” she said, referring to companies with strong balance sheets, stable earnings and effective capital allocation. “But valuations still matter.”

She warned that many quality stocks now trade at significant premiums. “Relying purely on backward-looking screens is not enough,” she said, advocating a more qualitative approach that considers a company’s ecosystem and competitive position.

As an example, she described trimming a long-held US connector manufacturer in the IT sector as valuations stretched, while initiating a position in a Japanese competitor with similar business strengths but more attractive pricing. “The quality of the business hadn’t changed,” she said. “The valuation had.”

Caddick, meanwhile, addressed the well-trodden passive-versus-active debate. While he explained passive investing itself is not overrated, its use can create unintended risks. “Passive has been a healthy force for the industry,” he said, noting that it has driven fee compression and exposed weak active managers. “In that respect, we see passive as an enabler.”

However, in highly concentrated markets, passive exposure can amplify risk by allocating more to the biggest names. “That’s where active management can help; by managing position sizes and looking for opportunities away from crowded trades,” he said.

Roberts, meanwhile, challenged the notion that all bonds are inherently defensive. Italian government bonds, he argued, remain a crowded trade that still behave like a risk asset. Short-dated high yield, often seen as safer because of its low duration, offers little margin for error at current valuations, while AT1 bank securities, widely held in many investor portfolios, carry equity-like risks.

“Another consensus trade has been curve steepeners,” he added. With long-dated bonds now offering much higher yields, he suggested they could outperform if rate cycles are closer to their end than many expect.

Agarwal questioned another long-held assumption: that government bonds will always be an effective hedge for equity risk. While that relationship held firm in a low-inflation world, she argued that during recent corrections, bonds and equities often fell in lockstep.

“Bond markets are more nuanced now,” she said. Short maturities are driven largely by central bank policy, while long maturities are shaped by supply and fiscal credibility. “We still see value in bonds, but portfolios need a more active and diversified approach.”

Wildcard scenarios: Experience exodus, ESG and AI expectations

The final part of the discussion turned to less conventional risks and longer-term market shifts.

Caddick highlighted a structural issue within asset management itself: the decline in experience. “Many portfolio managers today have only operated in the post-financial crisis, quantitative easing environment,” he said. “Managing through multiple market cycles can’t be learned from textbooks.”

As more experienced managers leave the industry, the depth of crisis experience is thinning, something he cautioned could be an issue in the next major downturn.

Agarwal addressed the future of ESG, arguing that while the hype cycle may be over, the underlying principles remain important. “I hope ESG doesn’t come back in the same hype-driven way,” she said. “The concept became jargon-heavy and confusing, but clearer regulation and more consistent reporting could allow it to re-emerge in a more pragmatic and transparent form.”

Thakrar was asked what it would take for equity investors to move beyond the AI and “Magnificent Seven” narrative. She noted that investor behaviour tends to follow recent performance, and the dominance of those stocks in recent years has been hard to ignore.

“It will take time for flows to broaden meaningfully,” she said, but opportunities are already emerging beyond the direct AI leaders. Parts of healthcare, including outsourced research and services, were highlighted as areas benefiting from structural demand and AI-enabled efficiencies, but are not subject to the same valuation extremes.

Roberts closed by warning that markets may be too relaxed about geopolitical and structural risks. US Treasuries, he argued, still trade with a significant safe-haven premium, while other markets embed heavy political risk discounts.

More broadly, he cautioned against assuming the current wave of AI investment will translate into stronger global growth. “Strip out AI-related spending and global corporate investment looks relatively weak,” he said. “But technological revolutions don’t guarantee higher overall growth. Competition tends to erode excess returns.”

For investors, this should reinforce the importance of bottom-up selection and careful positioning rather than relying on broad macro-optimism.

As Jeyarajah suggested at the outset, the roundtable offered challenges to prevailing narratives rather than exacerbating outlook fatigue. The discussion served as a timely reminder that what is most widely agreed upon in markets is not always what matters most.