Investors enter 2026 carrying the scars of a volatile year, writes Etienne Viljoen, chief investment officer at Aurora Capital.
Markets have moved rapidly between fear and optimism. Policy signals have shifted. Narratives around inflation, interest rates, AI, and geopolitical risk have all competed for attention.
The temptation is to chase certainty where little exists. Instead, the more productive approach is to identify those structural forces that will shape returns over the next decade, while maintaining discipline through the inevitable short-term noise.
Three macro variables will matter most in the year ahead.
The first is the path of global interest rates. Central banks have held policy in restrictive territory for longer than many expected. The timing and pace of any move toward neutral policy will influence everything from equity valuations to credit conditions and currency flows.
The second is the durability of disinflation. If inflation proves sticky, rate cut expectations will unwind quickly.
The third is the resilience of the global consumer. Household demand remains the final support for growth in many economies. Any deterioration here will expose overly optimistic earnings forecasts.
Layered on top of this is geopolitics. Supply chain realignment, election cycles, resource security, and regional trade blocs will continue to redirect capital. Currency volatility and commodity price swings will follow.
Technological adoption sits firmly in this mix. AI is already driving productivity improvements in several industries. Regions that integrate these tools effectively may offset slowing growth elsewhere.
Against this backdrop, certain sectors are often described as safe bets. However, the label should be used carefully, given how much of these sectors’ resilience stems from structural elements.
Where structural resilience sits
Technology growth is still being driven by AI adoption, automation, cloud migration, semiconductor demand, and rising cybersecurity investment. These are no longer emerging trends. They are embedded in the operation of modern economies.
Renewable energy sits on a similar footing. Mandated decarbonisation, electrification, and grid modernisation continue to push capital into storage solutions, solar components, and green hydrogen value chains. What began as an alternative energy story is now core infrastructure in many markets.
African infrastructure follows its own structural logic. Urbanisation continues to accelerate. Life expectancy is rising. Regional trade integration is progressing, while transport and energy systems remain underdeveloped.
This combination creates sustained demand for investment in logistics, telecommunications, and electricity networks, often through public-private collaboration.
The strongest opportunities sit where these themes come together. For example, AI-enabled industrial technology, renewable electricity at scale, and critical mineral processing that supports the global energy transition. These are multi-decade transformations rather than short-term trades.
Alternative thinking
Private assets, such as private equity, private credit, real estate, infrastructure, and agriculture, can play a stabilising role in a diversified investment portfolio. While they are not immune to economic cycles, their structural features and return drivers differ from public markets, which can reduce portfolio volatility, improve downside resilience, and enhance long-term outcomes.
Private assets offer diversification across both risk factors and cash flow profiles. Private credit and core real estate typically generate steady income streams through contractual payments or leases, which can offset the more cyclical earnings of listed equities.
South Africa’s investment landscape is becoming increasingly conducive to private asset investments, driven by a strategic convergence of regulatory reforms and strong demand for alternative capital. The market is currently viewed as “ripe” for global capital, with private equity (PE) returns projected to outstrip those of listed equities in the coming years. Structural shifts in Public-Private Partnerships (PPPs) and a massive infrastructure backlog are creating clear entry points for long-term investors.
Risk still has a price
Of course, caution remains essential. Expectations for rate cuts may not align with the realities of inflation. Global trade fragmentation increases earnings volatility for multinational companies. Additionally, equity valuations in select technology segments look stretched after rapid AI-driven rallies. Credit markets may be underestimating refinancing risk. And then China’s uneven recovery and potential commodity price spikes also warrant attention.
Risk management in 2026 will be about avoiding overexposure to single themes, geographies, or crowded trades. Quality assets acquired at reasonable prices remain the most reliable defence. Overpaying significantly reduces future return potential, even for excellent businesses.
Balancing defence and growth is less about timing the market and more about knowing your own horizon. Long-term strategic asset allocations exist for a reason. Abandoning them whenever volatility occurs usually does more harm than good. Liquidity should be held where near-term obligations are clear, not as a blanket response to uncertainty.
At the same time, exposure to long-duration growth themes such as digital infrastructure, renewable electricity, and African industrial capacity needs to be built patiently. These opportunities do not arrive on a schedule.
Trying to jump in and out of risk positions with precision is a costly habit. Infrastructure and private market investments offer a different profile. Contracted revenues can soften volatility while still allowing participation in long-term expansion. That balance matters more than perfect timing.
Restoring confidence through discipline
Strengthening portfolios for the year ahead starts with a realistic look in the mirror. Some exposures are held because the story sounds good, not because the assumptions are robust. Those deserve a second look. Portfolios built around strong balance sheets, predictable cash flows, and sensible leverage generally hold up better when markets become unsettled. That is not exciting. It is effective.
Liquidity plays a different role. It is not there to generate returns. It is there to create room to act when markets misprice risk. Private investments and other less correlated assets can add another layer of resilience, not because they are immune to volatility, but because they move to a different rhythm.
ETFs remain a practical way to gain thematic exposure without concentrating risk in a handful of names. What matters most is consistency in decision-making. Clear investment processes do more to protect long-term wealth than any single market call.
Markets in 2026 will test patience and conviction. The real opportunity is not in trying to anticipate every turn, but in building portfolios that stay standing when conditions change, while remaining positioned for long-term growth.