Fund managers are bullish heading into 2026 despite artificial intelligence (AI) and private credit bubble concerns, according to analysis from Quilter.

Quilter’s latest Investor Trends survey asked fund managers to rank their current risk appetite from one (very bearish) to 10 (very bullish) for the next six to nine months.

The average score had risen from 5.4 at the end of Q2 to 5.9 at the end of the third quarter, with fund managers showing cautious optimism despite recent market falls.

Fund managers believed that private credit market stress was currently the most ‘underappreciated’ risk, with 65 per cent of respondents identifying the market as such.

Almost half (47 per cent) said the overvaluation in tech stocks and the AI trade was an underappreciated risk.

Quilter noted that there had been some high-profile blow ups in the credit market over the past few months, especially in the private space.

Fund managers were less concerned about the apparent bubble in gold, with the precious metal rising from $2,500 at the beginning of the year to nearly $4,400 before falling to around $4,000.

Investors appeared to believe that this pause in growth would not be long lasting, with 81 per cent expecting gold to rise by a minimum of 5 per cent over the next six months, and 19 per cent anticipating growth of 10 per cent over the same period.

“It is interesting to see that despite some well publicised and worrying risks developing in markets, including the recent falls, fund managers are effectively shrugging their shoulders and becoming more risk tolerant,” commented Quilter investment strategist, Lindsay James.

“It is clear that professional investors continue to look at the wider corporate picture and sparks of optimism remain that markets could grind higher in 2026.

“That is not to say fund groups are not cognisant of the risks in the credit market. The blow ups of First Brands and Tricolor have sent shockwaves amongst financial institutions and given the meteoric rise of the private credit industry it is right that questions be asked. If we see any wider contagion then it is likely that further volatility could emerge.

“It is perhaps this backdrop that sees investors be comfortable with the current level of the price of gold. Demand from central banks has helped to sustain the rise to date, and despite a recent correction fund managers again appear comfortable with current valuations.

“If we do start to see additional volatility in other areas of the market, investors may just be attracted to gold’s shining qualities once again.”

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