Portfolio Strategy Heading Into 2026: Commodities First, Bonds Second, Equities Selective

As investors approach 2026, portfolio allocation has moved to the top of the agenda. A new phase of commodity competition triggered by U.S. President Donald Trump’s rare earths strategy, the global rate-cut cycle, and persistent geopolitical uncertainty are reshaping investment preferences. Commodities are expected to take center stage, followed by bonds, while equities remain selective amid profitability and interest-rate pressures. Inflation dynamics, geopolitics, and domestic political developments will continue to define strategy choices in the year ahead.

2026 Portfolio Allocation: Commodities Take Priority

Looking at the global investment landscape heading into 2026, it is becoming increasingly clear that a new era of “commodity competition” has begun. Policies pursued by U.S. President Donald Trump around rare earth elements are not limited to strategic metals alone but signal a broader contest across commodity markets.

Against this backdrop, allocating the largest share of portfolios to commodities — particularly copper, silver, and gold — appears to be the most rational starting point for 2026.

Bonds and fixed-income instruments rank second. Throughout 2025, foreign investor interest in bonds was notable, and with the rate-cut cycle expected to continue, opportunities in fixed income are likely to expand further. Declining interest rates would improve bond valuations and enhance their role as a stabilizing component within portfolios.

Equities: Cheap but Still Under Pressure

Equities, while still appearing relatively cheap on valuation metrics, come third in the allocation hierarchy. Profitability pressures and the persistence of high interest rates continue to weigh on equity performance. These constraints are expected to ease gradually from the second quarter of 2026 onward, but deposit rates remaining attractive still limit the relative appeal of equities in the near term.

In international markets, European equities stand out due to their foreign-currency return potential. A diversified basket focusing on infrastructure, defense, and banking stocks offers a balanced way to gain exposure.

Suggested overall portfolio allocation for 2026:

• 35% commodities

• 30% bonds/fixed income

• 35% domestic and international equities

Which Sectors Could Outperform in 2026?

From a sectoral recovery perspective, banking deserves primary attention. An improving loan-to-deposit spread, the positive balance-sheet impact of fixed-income securities, and potential easing in provisioning requirements all serve as key tailwinds for banks.

Renewable energy follows closely, supported by global energy transition policies. Beyond these, several sectors show potential for positive differentiation:

• Holding companies

• Technology

• Construction

Real estate investment trusts (REITs) and technology indices are also expected to remain relatively resilient throughout 2026.

How Should Investors Position Themselves?

Inflation — and, more importantly, inflation expectations — will remain the key determinant for 2026. Failure to make sufficient progress on disinflation poses the largest risk, as it could once again delay investor expectations.

As advanced economies accelerate rate cuts, emerging markets are likely to benefit from renewed capital flows. Türkiye’s potential success in controlling inflation in 2026 could allow it to capture a larger share of this opportunity, possibly supported by sovereign credit rating upgrades.

Geopolitical and Political Risks: Uncertainty Is Structural

Türkiye’s location in one of the world’s most geopolitically sensitive regions continues to influence both domestic and foreign investor sentiment. Geopolitical developments remain highly dynamic and capable of triggering sharp price movements in the short term.

At the same time, the global shift toward a multipolar world order, marked by intensifying competition between major blocs, appears structural and enduring. Any improvement in relations with the U.S. and the EU could provide additional support for Türkiye.

Domestic political developments, as in 2025, are also expected to remain a decisive factor shaping investor preferences. Under these conditions, portfolio flexibility is critical.

EUR/USD Outlook: March 2026

The euro-dollar parity currently trades around 1.16. Despite weak growth in Europe, softness in the dollar index has helped preserve this level.

The Federal Reserve’s earlier start to rate cuts compared to the ECB limits excessive dollar strength, while a slow but steady recovery in Europe keeps the euro within a defined range. This environment points to a measured upward bias rather than a sharp move.

Signs of bottoming growth in the euro area and a controlled decline in core inflation further support this outlook. Under a balanced scenario, EUR/USD is more likely to remain within the 1.16–1.18 range by the end of March 2026.

Source: A1 Capital

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