There are some trends which have emerged in 2025 that might have legs as we enter 2026, and possibly for years to come.
Around the world, Value-style stocks, and the funds which invest into them, remain good value at worst, and cheap in many instances. The Value-style is already illustrating its ability to outperform the Growth-style leaders of the last decade or so.
To illustrate this you can compare the iShares MSCI World Value Factor ETF (IWVG) with iShares World Momentum Factor. The former is up 27% year to date, and the latter just 14%, and with notably more volatility. The relative attraction can clearly be illustrated by the 3.5% yield of the former and 1.5% for the latter.
The battleground between Value and Growth is illustrated by lots of pictures in “Value. A sleeping giant?”, with links off to much more research at the end. The multi-year turnaround from Growth to Value has had a few false starts – but once entrenched it should persist for years.
Two notably cheap Value sectors have begun to stir this year, oil/energy and Latin America.
Last time the spotlight was on the unloved oil sector. It has been a dog sector since 2009, from which point “Growth” began a storming bull market. Using iShares Oil Gas Exploration (SPOG) as a benchmark for the energy equities, you want the price of this ETF up through 21.2 to move the odds in favour of a recovery in 2026. And you don’t want the price anywhere near 18.4, as this increases the chances of the positivity being misplaced. Guinness Global Energy has a forecast dividend of 4.5%, decent compensation for the risks.
Latin America is another dog of the last decade. Although there have been decent gains in 2025, 35-40%, this hides the long term doldrums. iShares MSCI Latin America (LTAM) remains 20% below its 2011 peak, and has been closely correlated with the commodity cycle, for better and worse. If the latter cycle is now entering a multi-year uptrend, LatAm is also a buy, with juicy yields e.g. Aberdeen Latin American has a forecast dividend yield of 5.6%.
These dogs of the last decade appear to be shedding their fleas, just when some of the stars are beginning to lose their shine - a theme we’ll be exploring further in our New Year webinar (details to come soon).
For example, tech giant Oracle announced in September that it was going to invest aggressively into AI data centres, to great acclaim… and is now down 40%. At the moment such falls amongst the big players are isolated, but doubts continue to grow. Will AI profits emerge quickly enough to justify the mouth-watering valuations?
The AI mania will not die quietly, but in the meantime crypto is already a graveyard for some, and it is early days. Crypto is bought because the price goes up… always…until it doesn’t. Bitcoin is now down 30%, many who embraced this bubble early have been sellers, and today’s buyers are late-to-the-party retail purchasers via ETFs. Forced selling will occur in scale if prices fall much more, and the freakish fanaticism will be blown away.
On which note, Saxo Bank have entertained us with their traditional festive fayre, Outrageous Predictions For 2026.
One favourite is that crypto currencies collapse as advances in quantum computing smash the avowed digital security on which crypto relies. Gold and silver soar as the ultimate “no password needed” assets, they predict.
Quantum computing will indeed be a huge leap forward. It has been calculated that some tasks which might have taken 25 years for a conventional computer will only take 5 minutes with a quantum computer. These sorts of advances are probably years away, which is why the prediction for crypto is “outrageous”. But you never know.
In the fortnight since the last Friday note the US has cut interest rates, much as expected. With the economy struggling while inflation remains stubborn, the Fed decided to fight the stagnating economy rather than inflated prices – the classic stagflation conundrum. Over that period the S&P 500 is up 1.3%. Only Europe ex-UK is notably better, up more than 2% and led by Germany. Most else was little changed.
The UK indices were barely changed. Small caps gained a little more than the FTSE 100 (up 0.3% versus 0.1%), and this would need to be sustained for a good few weeks into the New Year before it felt like investors were buying into the prospect of much lower UK interest rates on top of cheap valuations.
Silver has enjoyed itself, up 15% over the 2 weeks. Gold was much more subdued, up just 3%. This kind of differential is exactly what to expect at this stage, silver always being much more “spikey” once it begins to catch up with the gold fever. A separate question needs to be answered next week – is the anticipated correction in gold already over, with barely a correction worthy of the name?
Oil and energy were down very slightly. The very diversified JPM Natural Resources was up 2.4%, such funds allowing you to sidestep trying to figure the next move in the very mixed commodity universe.
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