For 2026, which industries are the best to invest in?

Investment trust portfolio managers discuss the industries and geographical areas they believe will perform better in 2026

In the last few weeks of the year, you might be preparing your portfolio for 2026.

There are many factors to take into account when deciding where to invest for the upcoming year, such as whether to purchase gold and other commodities or back bonds.

Alternatively, you might want to stick with stocks. In that scenario, which industries and geographical areas have the best chances for 2026?

Information technology is the investment sector that fund managers believe will do the best in 2026, according to a survey conducted by the Association of Investment Companies (AIC), an industry group that represents investment trusts in the UK.

Information technology was selected by 19% of the 21 managers surveyed as the top-performing industry for 2026, with consumer staples and healthcare coming in second and third, respectively, at 14%.

This positive outlook for tech stocks is definitely primarily driven by artificial intelligence (AI).

"AI is developing at extraordinary speed," stated Polar Capital Technology Trust (LON:PCT) fund manager Ben Rogoff. "We anticipate that in 2026, these models' capabilities will become evident, and investors in all industries will find it more and more difficult to ignore the impact of AI. A "

However, information technology is ranked second, after energy, with a five-year time horizon. This may reflect fund managers' belief that, in the long run, AI energy stocks will benefit from the tech sector's growth being constrained by AI's energy requirements.

"Capital spending in AI, infrastructure, and energy continues to accelerate," JPMorgan American Investment Trust (LON:JAM) portfolio manager Felise Agranoff stated. She continued, "AI investment alone is forecast to hit around £300 billion a year" in the United States.

Which areas do managers believe will be the best in 2026?

According to the AICs survey, over a third (38%) of investment trust managers believe that emerging markets (EMs) will be the best-performing region in 2026.

According to Omar Negyal, portfolio manager of JPMorgan Global Emerging Markets Income Trust (LON:JEMI), "we think the next chapter for emerging markets looks increasingly upbeat." "After years of exuberance, India, a long-term growth powerhouse, is beginning to look more sensibly priced, while China's recovery is gaining traction as domestic investors return and valuations remain appealing." A "

In a suburban area of Chongqing, dense clusters of residential high-rises dominate the skyline, reflecting the city's rapid urbanization and population growth.

China's economic recovery is gaining momentum despite persistent difficulties in its real estate market.

Negyal continued by saying that the nation is benefiting from significant reform and that Greeces' comeback story is a huge plus.

"The real excitement, though, is in technology," Negyal remarked. Businesses in China, Taiwan, and South Korea are driving the global supply chains for semiconductors and artificial intelligence, laying the groundwork for future expansion. A "

In the coming year, EMs should also benefit from a weaker US dollar and increased domestic demand.

The good news for UK stocks is that, with 19 percent of the vote, they trailed EMs. The UK's flagship FTSE 100 index is expected to rise above 10,000 next year, according to two thirds of respondents (67%).

According to Simon Gergel, manager of Merchants Trust (LON:MRCH), "there is an exceptional opportunity at the moment in medium-sized UK higher yielding companies." "Long-term investors have a great opportunity set due to the highly polarized stock market and negative sentiment regarding the UK economy. The "

Interest rate reductions may help UK stocks. Even though 95% of the managers polled think that UK inflation will stay higher than the Bank of England's 2 percent target rate in 2026, more than two thirds (71%) anticipate that UK interest rates will drop to between 3 and 4 percent, and another 14% anticipate that they will fall below 3 percent.

Investment trust managers selected EMs as the top performer over a five-year period in 28% of cases, followed by the UK (19%), China, and Europe (tied at 14%).

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