Adapting to Uncertainty in an Era of Energy Shocks and AI Disruption

L&G's Q2 2026 Asset Allocation Outlook argues that investors are confronting a growing list of risks, but that disciplined portfolio construction requires focusing on fundamentals rather than reacting to every new source of anxiety.

• The firm believes the conflict in the Middle East has challenged what previously looked like a benign outlook for growth and inflation, with higher energy prices threatening both consumer spending and central-bank policy assumptions.
• L&G remains constructive on equities despite recent volatility, arguing that geopolitical sell-offs often create opportunities, while maintaining a cautious stance toward credit markets where downside risks appear greater than upside potential.
• The report also highlights a broader market shift toward "heavy asset, low obsolescence" industries such as commodities and infrastructure, while warning that not all physical-asset businesses possess durable competitive advantages.

Read the full outlook for L&G’s views on inflation, energy markets, AI investment, portfolio construction and global asset allocation.