ASB Chief Investment Officer Frank Jasper reviews the year that was and the opportunities that
2026 could potentially deliver.
ASB Chief Investment Officer Frank Jasper
Over the past few years, ASB has been reframing the way we look at markets, alongside our investment partner Black Rock. While traditional economic drivers, such as monetary policy, stable inflation and predictable growth still play a role, they are no longer our primary lens. Now, we place greater emphasis on longer-term trends that are transforming the global economy, known as mega forces.
The mega forces consist of five trends: the rise of AI and the impact of digital disruption, geopolitical fragmentation, demographic divergence between the emerging and developed world(including younger and older populations), the transition to a low-carbon economy, and a fast-changing financial landscape, including innovation in digital currencies and tokenisation.
The year that was: Mega forces, mega returns
Throughout 2025, we’ve seen the impact of mega forces on investment portfolios, particularly AI and digital disruption. AI has dominated headlines and has been a key driver of investment returns. The poster child for this is NVIDIA, the producer of high-end chips powering AI models like those from OpenAI, Meta and Anthropic, and data centres around the world. ASB portfolios have benefited from exposure to companies like this for years.
AI wasn’t the only story. Geopolitical fragmentation – the shift in global power dynamics as the US becomes increasingly inwardly focussed, and China’s strength and influence grows – has resulted in trade wars, increased defence spending and heightened uncertainty.
One beneficiary of this was gold. Central banks, and other investors, looking for safe-haven assets put wind in gold’s sails leading to outsized returns, with gold rallying over 50% so far this year and up 35% over the past three years.
Investors have been fortunate to enjoy these strong returns in ASB portfolios. But (cue your favourite cliché here) trees don’t grow to the sky. In our view, mega forces will drive markets and asset prices for years to come – yet this won’t happen in a straight line. Smart investing requires overlaying long-term trends with what’s happening right now, be it where we are in the normal market cycle, asset prices and investor sentiment.
More artificial, less intelligent?
We believe we’re still in the first innings of the AI mega force – a phase characterised by building and scaling AI models, developing the infrastructure to support them, and then seeing what applications and services are built on top.
Massive sums of capital are flowing into the sector at speed, including large investments in data centres and the silicon that runs the technology. As a result, valuations of companies directly exposed to these trends are currently looking fully priced. However it’s important to differentiate value from the underlying trend, the latter of which we think will stay intact for many years to come.
While we tend to be cautious with labels like “bubble,” diversifying our exposure to the AI mega force, in the short term, makes sense to us. That’s why we’ve reduced exposure to global companies that are the primary AI beneficiaries like NVIDIA and diversified our portfolios into infrastructure assets, and into emerging market shares. That way, ASB Funds still benefit from the broader impacts of AI through both infrastructure and wider economic productivity improvements. We also protect portfolios from the near-term hype cycle and own much more reasonably priced assets.
Less shiny?
Gold has delivered its own surprises in our portfolios. Our thesis was that gold would behave like fixed income, providing a steady return and offering downside protection should growth assets, such as shares, sell off. It also played into our geopolitical fragmentation mega force.
This thesis has been both right and wrong. As expected, gold performed admirably as a defensive asset, providing protection during periods of instability – until recently. What was unexpected was the strong rally in gold prices. Gold fever took over, as it behaved less like a defensive asset and more like a growth asset. When an asset isn’t likely to do its intended job for the portfolio, then it’s time to reduce our exposure – which we did in October.
2026 opportunity with discipline
As we look to 2026, ASB’s focus remains the same. Similar to the lessons from AI and gold, we’ll continue to position portfolios in a thoughtful and pragmatic way – blending the mega force framework, long-term thinking, short-term cyclical influences, and managing risks effectively along the way. Doing this will be key to investment success in 2026 and beyond.
For more expert insights and the latest market commentary from ASB, visit www.asb.co.nz/invest