Despite persistent uncertainties, 2025 proved to be another solid year for global equities. After delivering over 25% in 2024, the MSCI All Country World Index (total return in euros) stood at 8.5% as of the end of November 2025. In US dollar terms, however, the index rose by more than 21%. For euro-based investors, the 12% weaker dollar significantly eroded returns. In 2024, the opposite was true, as a stronger dollar boosted performance. With the US market accounting for 65% of the global index, both Wall Street and the dollar remain dominant forces.
"}},{"componentType":"sectionTitle","title":"Valuations Outpaced Earnings Growth"},{"componentType":"paragraph","richBody":{"value":"What drove this strong performance? Corporate earnings within the global index are expected to have grown by more than 9% in 2025, slightly above our forecast of 8%. The fact that the index rose even more sharply reflects higher valuations: the average price-to-earnings (P/E) ratio increased based on both realised and expected earnings. This trend has persisted for two years. The P/E ratio of the global index climbed nearly 10% this year to over 19 times expected earnings for the next twelve months.
"}},{"componentType":"sectionTitle","title":"Earnings Growth to Accelerate, Valuations Likely to Ease"},{"componentType":"paragraph","richBody":{"value":"With global economic growth remaining steady, inflation easing slightly and rate cuts from central banks including the Federal Reserve, nominal corporate earnings (including inflation) could accelerate further. However, unlike recent years, we expect valuations to come under pressure. The elevated valuation of US equities is likely to normalise, weighing on the global average. Earnings growth among leading tech firms will remain strong but should slow towards the market average. With nine US tech giants among the world’s ten largest stocks, their influence remains significant.
"}},{"componentType":"sectionTitle","title":"Expect Modest Returns"},{"componentType":"paragraph","richBody":{"value":"We believe an average earnings growth of around 10% for the global index is achievable—slightly below analysts’ consensus of more than 12%. For 2027, we expect growth of roughly 8%, again below the consensus of 11%. Assuming a slightly lower P/E ratio of 18.5 times expected 2027 earnings by the end of 2026 (currently 19.3 times for the next 12 months), the projected return for the global index in 2026 would be around 6% in US dollars, including 2% dividend. Currency movements will remain a key factor for euro-based investors—either positively (stronger dollar) or negatively (weaker dollar).
"}},{"componentType":"sectionTitle","title":"Listed Real Estate Could Stage a Recovery"},{"componentType":"paragraph","richBody":{"value":"After a disappointing 2025, listed real estate could rebound next year, supported by expected rate cuts in the US. With a reasonably attractive dividend yield and modest price gains, we forecast a total return of around 5% for listed real estate—providing a welcome complement to overall portfolio returns.
"}},{"componentType":"sectionTitle","title":"Active Management Is Key"},{"componentType":"paragraph","richBody":{"value":"Overall, we expect moderate returns in 2026. The gap between expected returns on equities and bonds is narrow. The equity risk premium has fallen to its lowest level in two decades, driven by rising share prices, higher valuations and interest rates that have not declined significantly. Yet equities can still offer attractive opportunities. We anticipate substantial differences in returns across regions, sectors and individual companies. This makes active portfolio management more important than ever.
"}},{"componentType":"sectionTitle","title":"Winners and Losers Will Diverge Further"},{"componentType":"paragraph","richBody":{"value":"We expect the development of artificial intelligence (AI) to accelerate in 2026. Investment will continue to rise, and the benefits will extend beyond technology sectors. Utilities and healthcare, for example, could see higher margins thanks to growing electricity demand and efficiency gains. Equally important is avoiding the casualties of creative destruction. In our view, major losers are inevitable—potentially even within the tech sector. Disruption creates risks, but also opportunities. You can read our perspective on the AI investment theme here.
"}},{"componentType":"sectionTitle","title":"What If Our Base Case Does Not Play Out?"},{"componentType":"paragraph","richBody":{"value":"As always, we outline both positive and negative scenarios alongside our base case. In the positive scenario, economic growth and inflation accelerate more than expected. Corporate earnings forecasts would improve significantly, and investors would likely accept higher valuations. Equity returns could then reach around 18% in US dollars. In the negative scenario, the opposite occurs: falling earnings and lower valuations could push share prices down by roughly 12%.
"}},{"componentType":"sectionTitle","title":"Do Not Fixate on Forecasts"},{"componentType":"paragraph","richBody":{"value":"History shows that predicting market movements is far from easy. Treat our estimates with caution. For us as global investors, scenario planning provides a framework for shaping our outlook and investment policy. We continuously test our base case against real-world developments. One certainty for 2026: the world will remain in motion. Geopolitical tensions are higher than in recent years and may trigger sharp market swings. In such moments, staying calm and avoiding emotional decisions is essential. You can read where we see the greatest risks here.
"}},{"componentType":"sectionTitle","title":"Neutral Allocation to Equities and Bonds"},{"componentType":"paragraph","richBody":{"value":"Based on our current outlook, we maintain a neutral weighting for equities and bonds in the tactical asset allocation of ING’s investment strategies as of November. Listed real estate is overweight, while commodities and alternative investments remain neutral within the overall portfolio. If you want to stay informed about our current outlook and positioning, read our monthly Market Outlook.
"}},{"componentType":"linkList","iconTitle":{"title":"Read more"},"textLinks":[{"url":"/en/personal/investing/market-news-and-views/investment-outlook-2026-home","text":"Investment outlook 2026: Homepage"},{"url":"/en/personal/investing/market-news-and-views/investment-outlook-2026-fixed-income","text":"Investment outlook 2026: Fixed income"},{"url":"/en/personal/investing/market-news-and-views/investment-outlook-2026-opportunities","text":"Investment outlook 2026: Opportunities"},{"url":"https://assets.ing.com/m/7dfc82cb56e72468/original/Investment-Outlook-2026.pdf","text":"Investment Outlook 2026: Download PDF"}]},{"componentType":"sectionTitle","title":"Good to know"},{"componentType":"paragraph","richBody":{"value":"Investing involves risks and costs. The value of your investment may fluctuate. Past performance is no guarantee of future results. Read more about the risks of investing.
This publication has been prepared on behalf of ING Bank N.V. and is intended for information purposes only. ING Bank N.V. obtains its information from sources deemed reliable and has taken the utmost care to ensure that the information on which it based its views in this publication was not incorrect or misleading at the time of publication. ING Bank N.V. does not guarantee that the information it uses is accurate or complete. The information contained in this publication may be changed without any form of announcement. Copyright and data file protection rights apply to this publication. Data from this publication may be reproduced provided that the source is stated. ING Bank N.V. has its registered office in Amsterdam, commercial register no. 33031431, and is regulated by the Dutch central bank De Nederlandsche Bank (DNB) and the Netherlands Authority for the Financial Markets (AFM). ING Bank N.V. is part of ING Groep N.V.
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