Asian ultra-high-net-worth individuals ( UHNWIs ) should pursue active management strategies to effectively navigate the uncertainties of 2026, including heightened market volatility, geopolitical tensions, and the transformative potential of artificial intelligence ( AI ).

With many investors still keeping substantial cash reserves, a panel of experts from Capital Group urged UNHWIs to shift towards core, global, and active asset allocation focused on quality, income-generating, and resilient companies to capitalize on opportunities while mitigating risks.

Speaking at the group’s 2026 Investment Outlook forum in Hong Kong on February 10, the experts said investors should move beyond passive strategies that may falter in a restructuring global economy.

“There's still a lot of cash on the sideline,” says Toby Chan, head of client group, Hong Kong and Greater China, at Capital Group, referencing a Hong Kong CEO from a major global bank who estimates over 70% of assets remain in cash.

Chan attributes this to difficulties in articulating long-term investment cases amid market volatility. She cites what happened on January 30, when initial market gains evaporated in reaction to US President Donald Trump’s nomination of Kevin Warsh to succeed Jerome Powell as Federal Reserve chair. Silver plummeted 20% during the day.

Long-term fundamentals

Andy Budden, investment director ( equities ) for Singapore at Capital Group, addresses the broader “great global restructuring”, arguing that markets are adapting well to uncertainty by refocusing on long-term fundamentals.

“Markets have actually come back to long-term fundamentals,” Budden says, emphasizing AI's role as a “golden era of innovation” driving productivity and economic growth.

However, AI could also lead to job displacement, citing slowing US job growth in disrupted industries, which are affecting younger workers in particular.

For 2026, Budden sees opportunities in AI-enhanced productivity, estimating that new technologies often deliver twice the initially anticipated impact, as in the case of railways and the internet.

Manusha Samaraweera, Singapore-based fixed income investment director at Capital Group, warns that governments in developed markets, burdened by post-GFC and Covid-era debt, could become sources of instability rather than stability.

“Developed markets become not only no longer the source of stability, but actually increasingly the source of instability,” he says, citing recent wobbles in UK gilts, Japan, and France.

On currencies, Samaraweera dismisses premature fears of the US dollar losing its reserve status, predicting short-term weakness due to converging global growth and interest rates while affirming its entrenchment. The greenback still represents 60% of currency reserves and 80% of trade financing.

He advocates diversification, including higher-quality credit and modest emerging-market allocations, to build resilience.

Gains outweigh losses

Andrew Lee, investment director ( equities ) based in Hong Kong, acknowledges risks such as high valuations in the US and IT sectors, elevated AI expectations, and persistent geopolitics, which could trigger corrections.

“There could be corrections at some point during the period of 2026,” Lee warns, but raises historical patterns. He notes that S&P 500 corrections of 5% or more have occurred twice annually on average since 1954, yet markets recover with gains outweighing losses.

Opportunities lie in broadening earnings growth, with US resilience at 11%, Europe at 11-12%, and emerging markets in the high teens, including China's recovery. Lee notes that outside the “Magnificent 7”, there are undervalued areas which are trading at 22-23 times earnings versus 30 for the AI leaders.

The panel agrees on a “core, global, active” framework for asset allocation. “Core bit is this idea that for the last 10-15 years, the right approach for an equity investor was basically growth. And that is not going to be the right portfolio. So portfolios need to be balanced,” Budden stresses.

He advocates global exposure as the rest of the world catches up to US exceptionalism through governance reforms in Japan, Korea, and China.

Don’t time the market

Lee emphasizes “quality, income, and resilience.” He explains that “quality” involves companies with strong moats for sustainable earnings, while “income” focuses on dividend payers, and “resilience” targets firms navigating cycles, such as those in AI infrastructure, defence, healthcare, and experiential consumer services like travel.

The panel urges investors to deploy sidelined cash actively, avoiding the pitfalls of timing markets. “What really matters is time in the market, not timing the market,” Lee says, promoting a smoother journey through diversified, resilient portfolios.

Risks for 2026 include policy shocks and AI-driven disruptions, but opportunities abound in productivity boosts, corporate reforms, and undervalued global sectors.

As the Year of the Horse begins, symbolizing change, Capital Group's outlook is cautiously optimistic: active management, rooted in quality and resilience, can turn volatility into advantage, encouraging investors to engage rather than sit on cash reserves.