Resilience is important, but Fidelity says it's not the time to shy away from risk

“But we also recognise the likelihood of further shocks for which investors need to plan,” Mooney adds.

This hits at the dominant theme of what Fidelity sees over the second half of 2026, which is a shift from chasing returns to building portfolios capable of surviving whatever the world throws at them next.

The Iran conflict, persistent inflation and a fragmenting global order have forced a rethink.

"We have moved from a world that was defined by occasional growth scares into one of more structural instability. Varied sources of defence are necessary," the outlook states.

The practical consequence is that investors are increasingly pairing income-generating core allocations with selective exposure to long-term growth opportunities. Global short-duration strategies are drawing particular interest, offering yields with lower sensitivity to interest-rate movements.

High-quality fixed income and diversified solutions that can provide steady coupon payments and downside protection are also in demand. This is not being used as a retreat from growth but as the foundation for pursuing it sustainably.

"Now is not a time to shy away from risk," Fidelity's analysts write. "Only to ensure it's balanced in a well-diversified portfolio that will cushion the inevitable shocks when they come."

Rethinking safe havens

However, the traditional safe havens in which investors would normally seek shelter during turbulence are behaving unreliably.

“As the macro environment changes, so does the way we think about diversification,” Fidelity says.

“Heightened geopolitical and fragmentation risks are putting a strain on traditional safe havens, which means investors can’t rely on a single asset to support riskier elements of their portfolio.”

Gold has performed “surprisingly poorly” through the Iran conflict, while the US dollar looks less attractive as a long-term store of value amid more erratic US policymaking.

Fidelity's answer is diversification across a broader set of instruments. Commodities, particularly those with energy exposure, are highlighted as a useful hedge against geopolitical risk and inflation.

"Exposure to commodities should support portfolios with inflation set to remain higher for longer," the report states.

Gold retains a place in Fidelity's toolkit for its ability to respond to dollar weakness and rising equity-bond correlations, just not as a reliable short-term conflict hedge.

AI remains the most powerful force in markets

If resilience is the framework, AI is the engine. Fidelity is unambiguous that the AI capital expenditure cycle remains the single most powerful driver of global markets heading into the second half of the year, and that its effects are broadening.

“Most significantly, US tech behemoths are continuing to pour billions into AI development that is driving continued earnings momentum,” the firm says.

That immense spend is not only driving earnings momentum for the tech giants themselves; it is flowing down through the value chain to industrial enablers, energy infrastructure providers, and a widening group of businesses beginning to feel productivity gains from AI adoption.

“A wider set of US businesses are also starting to feel the impact of that AI-driven capex spend underpinning earnings and improving productivity,” the report notes.

“This broadening effect across the market presents enticing entry points while attention is focused on a small number of high-valued tech names.”

In Asia, the AI story is particularly concentrated in Korea and Taiwan, which together dominate global semiconductor and memory chip production.

“The current ‘supercycle’ is being driven by a capex race between some of the largest companies in the world all competing for leadership in this space,” Fidelity writes.

However, the firm also flags that elevated valuations leave the sector vulnerable to near-term volatility if AI demand softens.

“There is likely to be further upside but watch out for volatility in the near term.”

A new force in global asset management: Asian wealth

One of the more structural themes in Fidelity's outlook concerns the transformation of Asia's investor base. Rising affluence across China, Southeast Asia and India is creating a larger, more sophisticated pool of capital that is increasingly seeking exposure beyond domestic markets.

Hong Kong's recent rise to become the world's largest cross-border wealth centre is emblematic of the shift. Chinese outbound capital continues to find its way into regional and global markets through regulated pathways, while the broader trend toward international diversification extends well beyond China.

“Asian investors are turning more international in their outlook and more active in their portfolio construction,” the report observes.

The implications for global asset flows are significant. Asian investors are asking harder questions about traditional overweights to US assets and the dollar, and are increasingly drawn to strategies that offer global diversification, income, and resilience. ETFs, systematic strategies, private assets and semi-liquid strategies are all seeing growing adoption.

High conviction in emerging markets, but be selective

The uncertainty also means it’s important to be selective when allocating across regions. 

"We are underweight European equities, which are more exposed to supply disruption and the prospect of stagflation."

Emerging markets remain one of Fidelity's highest-conviction allocations, supported by the AI cycle, a softer dollar and structurally improving policy credibility. But the Iran conflict has created a clear divide within the EM universe: commodity exporters are benefitting while energy-importing economies in Asia face mounting pressure.

Brazil stands out as a beneficiary of rising energy prices, with attractively valued equities and scope for an easing policy cycle, while South Africa offers domestic fundamental strength and commodity support.

In Asia, Korea is singled out despite the regional energy strain, supported by the semiconductor cycle and corporate reform momentum.

"A discerning approach by EM investors is required," Fidelity writes.

The opportunity is real, but so is the need to distinguish between the winners and the losers in a world being reshaped by energy disruption and AI.

You can read Fidelity's full Mid-Year Outlook here.