Our 2026 Asset Allocation Playbook
A practical framework to improve portfolio outcomes
Introduction: The Case for Asset Allocation
This marks our very first macro piece. We have chosen to focus on Asset Allocation, a topic that is often neglected even though it is critical for generating the best possible returns. Why this topic? Well, it is hard to have eyes on every asset class. While we only invest in equities for the Aurelion Index, we still utilize asset allocation strategies to avoid missing out on global opportunities. If you don’t look at Japan, you are going to miss some great returns. The same applies to LatAm, to Europe, and the list goes on.
Admittedly, achieving comprehensive global coverage is nearly impossible without a team of many analysts. However, the imperative to look remains. You still need to scan the horizon, and that global perspective is essential.
To kick things off, let’s look at Model Allocations. As you can see within equity markets, an overweight position in Emerging Markets and Canada has driven a strong start to 2026. And as you already know, we absolutely love both LatAm and Canadian equities, and are positioned accordingly.
Canada & Emerging Markets Take the Lead
We believe this chart is highly relevant because it lines up with what markets have been rewarding so far. Investors have been looking for alternatives to U.S. large caps, and capital has rotated toward markets that feel less crowded and reasonably priced. As the chart shows, Canada and parts of Emerging Markets have fit that profile and have performed exceptionally well.
No Market Exaggeration
Now, let’s have a look at the current market sentiment.
You might assume that with equities rallying the market has become euphoric. But when we look at the data we simply do not see it. The NBI Market Sentiment Indicator is currently sitting at 61. That puts us firmly in neutral territory. There is absolutely no exaggeration in market sentiment right now and we are far from the extreme optimism levels that typically signal a dangerous market top. Crucially, while Main Street is feeling better, Wall Street is not getting ahead of itself. To us, that is a solid setup.
No Signs of Excess Confidence in Market Sentiment
On the consumer side, the mood is clearly lifting. US Consumer Sentiment has climbed to a six month high. To us, the driver here is obvious. Short term inflation expectations have dropped to a one year low as of early February.
US Consumer Sentiment Rises to a Six-Month High
As concerns about renewed price pressures ease, the consumer feels more confident, which directly supports the economic resilience we highlighted earlier. The logic is simple. When you are not terrified that prices will keep spiking, you feel better about spending today. The chart shows this inverse relationship perfectly. As inflation fears drop, sentiment rises.
What’s Driving Markets Today & Our 2026 View
Early 2026 has felt familiar so far.
