Eighty-four per cent of institutional investors are prioritising diversification as a key portfolio objective as geopolitical uncertainty and market concentration reshape global asset allocation, according to Schroders 2026 Global Investor Insights Survey.

The shift comes against a backdrop of elevated geopolitical risk, with conflict in the Middle East (69 per cent) and uncertainty over US foreign policy and global leadership (67 per cent) emerging as the leading concerns for investors.

Overall, the survey of over 1,000 institutional investors, wealth managers and other intermediaries globally with USD 72trn assets under management found that 85 per cent of respondents expect greater market volatility over the next 12 to 18 months.

Commodity and energy price shocks (53 per cent), further geopolitical escalation (52 per cent) and economic slowdown or recession (50 per cent) were also seen as the events most likely to impact portfolios in the year ahead.

In addition to diversification, downside protection/capital preservation (83 per cent) emerged as one of the most important portfolio priorities, while almost half of investors (47 per cent) said they were increasing geographic diversification outside the US.

With this increasingly uncertain investment backdrop, investors expressed strong conviction in the role of active management, with 85 per cent of investors confident it can help achieve investment objectives over the next 12 to 18 months, such as helping capture opportunities for outperformance, delivering nimbleness to navigate uncertainty and managing concentration risk in equity markets.

Furthermore, more than a third of investors (38 per cent) said they were increasing allocations to active management specifically to reduce index concentration risk.

Schroders group chief investment officer, Johanna Kyrklund, said: “In an increasingly volatile world, investors are reshaping portfolios to put diversification and resilience front and centre, while also juggling geopolitical risk. It is telling that in these circumstances, an overwhelming 85 per cent of investors expressed confidence that active managers can help achieve those objectives in the next 12 to 18 months.

“In recent years, we have moved from a globalised world prone to deflationary shocks to a geopolitically fragmented world, where restructuring of supply chains can contribute to inflationary shocks.”

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