M&G Investments recommends approaching credit markets with "caution and discipline," considering that credit spreads "remain tight by historical standards."
"This does not mean that investors should completely avoid credit, but rather that the margin for error is limited. Understanding spreads has meant that the opportunity cost of upgrading in terms of quality is low," the asset manager emphasizes in its investment outlook for the second half of 2026.
In this regard, the firm points out that this environment forces one to "resist the temptation" to try to anticipate the direction of credit markets, given that widening spreads "can occur very quickly" and "it is difficult to know in advance what their magnitude will be or how long they will last."
At the same time, M&G anticipates that global fixed income yields could rebound due to the rising cost of oil, concerns surrounding debt, and the strength of the U.S. economy.
The firm specifically mentions Brazil and Indonesia, where yields have rebounded from already high levels, and Colombia, whose domestic political landscape "has caused increased volatility."
AI, Valuations, and Stock Market Opportunities
In the stock market arena, the asset manager warns that some stocks "have reached excessive valuations" in certain segments as a consequence of the advancement of artificial intelligence (AI), while other areas have experienced "unjustified drops" in their prices.
"This dichotomy presents a significant opportunity for active investors to rebalance their positions within the AI theme, not only within the technology sector but also by expanding them to non-technology stocks whose businesses are likely to improve thanks to the use of AI," M&G argues.
The firm alludes to companies in sectors such as energy, industrial, healthcare, financial, and consumer, in addition to software and services firms, which have been impacted by sharp declines at the beginning of the year.
With a long-term perspective, the entity favors segments such as infrastructure, the low-carbon economy, and innovation, with AI as a central piece, considering that they have "lasting favorable structural factors" and are areas where capital is likely to continue flowing.
M&G backs this bet on strengthening energy security in Europe, along with the expansion of data centers to meet demand linked to AI and the development of the electrical transmission capacity and the grid necessary to sustain this entire process.