Geopolitical risks and sustained market volatility are likely to dominate the investment landscape this year, according to an annual survey by the Investment Management Association of Singapore (IMAS).

Some 85% of respondents anticipate heightened geopolitical risks and market volatility, up from 56% in 2025.

The survey conducted in late November and early December collected views from across 63 IMAS members collectively managing more than US$35 trillion globally. They include Singapore, regional and global asset managers based in the city state, as well as asset owners.

“It reflects the state of the world that we live in – the increased volatility,” Carmen Wee, IMAS’s chief executive officer.

“Fund managers would have to manage and position their portfolios in anticipation of this,” she says, adding that this should be done through diversification and adoption of more innovative strategies.

The two biggest threats that fund managers believe will hamper industry growth are accelerated flows into passive solutions, cited by 62%, and further margin erosion, cited by 57%.

Around 97% of fund managers believe the US Federal Reserve will continue to cut interest rates, with 69% predicting rate cuts ranging between 0.5% to more than 1% this year.

A majority, or 60%, think that the independence of major central banks may erode in 2026. 

The survey found that investment sentiment on Asia remains positive. China and Japan are expected to be the best performing markets this year, followed by India, Singapore and Taiwan.

This optimism is also reflected in stock market predictions. Some 72% forecast the MSCI Asia ex-Japan index to rise 10%-20% this year, and 73% predict a similar gain for the MSCI China index.

More than half the survey respondents expect Singapore’s Straits Times Index to rise 5%-10%, bolstered by resilient corporate earnings, dividend yields and government measures to revitalise the equity market.

The survey also found that income strategies, absolute returns, exchange-traded funds, emerging-market equities and commodities are the most popular investment strategies for 2026.

Meanwhile, adoption of artificial intelligence has increased and deepened, with 53% of respondents using the technology in investment processes, such as generating research insights and commentary. About 94% say the technology has enhanced productivity.