Similar to a number of wealth managers, they keep an overweight stance in global equities, driven by emerging markets, where valuations are more attractive and the outlook for earnings is stronger than in developed markets. In developed markets, they see opportunities in US small capitalisations.

They have adopted a more neutral outlook for technology. “The sector remains supported by strong fundamentals, including robust earnings growth and sustained artificial intelligence demand. However, we expect market performance to broaden, and now favour financials in the second half of the year,” Hechler-Fayd’herbe and Bindelli said.

They have raised exposure to global government bonds to neutral in fixed income, locking-in high yields as inflationary pressures ease. Within developed sovereign bonds, they see the most compelling opportunities in UK gilts, as well as Australian bonds.

“The US dollar should be supported by a stable US Federal Reserve outlook and a resilient US economy, and we have moved to a neutral stance versus lower-yielding developed currencies such as the euro and the Swiss franc,” Hechler-Fayd’herbe and Bindelli continued. They stay positive on higher-yielding currencies, including those in emerging markets. They prefer expressing these preferences against the Swiss franc or the euro.

Hechler-Fayd’herbe and Bindelli said that markets were entering the second half of the year having "digested" the Middle East conflict, and energy shock and inflation concerns. They believe that the interim agreement between the US and Iran struck in June has reduced market uncertainty as they move into the second half of 2026, although talks are continuing in order to secure a permanent deal.

They remain positive on risk assets, but volatility will persist. “Further inflationary pressures, a more restrictive Fed, geopolitical tensions, the US midterm elections and policy shocks such as tariffs, all demand vigilance,” Hechler-Fayd’herbe and Bindelli said.

Below, Lombard Odier outlines in detail its 10 convictions for the second half of 2026:

1. Emerging markets
The Middle East conflict has taken a temporary toll on emerging market assets (bonds and some stocks) but has not altered their appeal. Lower valuations compared with developed market equities now offer a good entry point for benefiting from superior earnings growth. Normalising oil flows from the Middle East and lower crude prices should help emerging market importers, especially in Asia. Lombard Odier’s preferred equity markets remain South Korea, South Africa and China. Emerging market tech firms combine more attractive valuations with stronger earnings growth than their developed-market counterparts. Emerging market bonds offer the strongest yield opportunities relative to credit quality in fixed income, while public debt ratios and external balances remain healthier than in developed markets. Emerging market currencies should also regain ground against the US dollar, which is expected to weaken now that geopolitical uncertainty in the Middle East has peaked.

2. Financials and selected cyclicals
With geopolitical risks receding, earnings prospects should broaden beyond the tech sector to a wider range of cyclical industries, many of which have borne the brunt of the energy shock. Lombard Odier favours financials for their solid earnings, attractive valuations, and strong capital returns. In other sectors, it likes sub-segments such as luxury, with strong pricing power and margins, along with demand stabilising as China and tourism recover. Key risks are a weak rebound in China, currency headwinds, and softening demand from aspirational consumers.

3. China opportunities remain, now onshore as well
Chinese equity markets have trailed other emerging markets recently. However, Lombard Odier believes that post peak geopolitical uncertainty, a broader approach is warranted. It therefore favours onshore equities alongside offshore markets.

4. Quality developed market equities with attractive dividends
Reinvesting dividends is one of the most reliable strategies for wealth preservation and growth in equity portfolios. Quality, dividend-paying companies in developed markets can offer attractive cash flows and lower stock price volatility than the broader market, as well as strong balance sheets. These companies span industries such as financials, energy, industrials, healthcare, consumer staples, utilities, and real estate.

5. Small caps recovery
Developed market small-capitalisation equities recovered in the second half of 2025 thanks to easing monetary policy, improving earnings revisions, and capital expenditure. Lombard Odier sees more upside potential due to attractive valuations, earnings growth and exposure to a potential manufacturing recovery. Small-caps have started the year well, but have paused since the start of the Middle East conflict due to their underexposure to the US tech sector. The private bank expects outperformance to resume with cyclical sectors growing driven by accelerating and superior earnings growth at attractive valuations relative to mid and large caps.

6. High-yielding sovereign bonds
With corporate spreads – the yields corporates offer above sovereign bonds – at historically tight levels, select, high-yielding government bonds offer attractive risk-adjusted returns. Ten-year UK gilts, Lombard Odier’s preferred exposure, have experienced some politically-driven volatility, but the firm expects the Bank of England to cut policy rates in 2027 after keeping them on hold this year, leading to a fall in long-term yields, and attractive total return prospects for gilts. It also likes Australian government bonds.

7. Convertible bonds
Global convertible bonds have significant exposure to the Asia-Pacific region and sectors such as utilities, real estate, and materials. Today’s rising volatility boosts the value of equity call options, despite some rises in bond yields. Convertible bond issuer default rates fell in 2025, supported by lower interest rates. Lombard Odier continues to monitor any risks stemming from AI ripple effects for issuers of convertibles.

8. Swiss real estate
In Switzerland, real estate investments still offer an attractive alternative source of yield for Swiss franc-based investors. Lombard Odier’s outlook for the Swiss National Bank remains for unchanged interest rates this year.

9. Hedge funds and private equity
To enhance diversification, investors should maintain exposure to hedge funds and private equity. Hedge fund strategies that focus on corporate activities, such as event-driven strategies, and equity market price dislocations, such as relative value/arbitrage strategies, can deliver returns irrespective of the direction of the broader equity market. Private equity can complement these exposures.

10.FX with clear domestic catalysts, funding by low yielders
Lombard Odier favours undervalued currencies with positive catalysts. However, with the prospect of the US dollar being better supported against lower-yielding currencies, the bank favours expressing this view against both the Swiss franc and the euro. In developed markets, it favours the Australian dollar, which benefits from supportive terms of trade and attractive interest rate differentials. It believes the Chinese renminbi will continue to strengthen moderately, backed by a large trade surplus and a rising official preference for continued currency appreciation. Elsewhere in emerging markets, it likes the South African rand and the Brazilian real.