Wealth

House View — Q3 2026

Each quarter our Wealth Insights publication answers a selection of key client questions and sets out our House View on the global economy and financial markets. Three themes shape the third quarter.

AI has become a dominant market theme, driven by massive global investment and its growing influence across sectors, asset classes and economic growth. We remain overweight global equities, where the natural technology tilt of Islamic equity indices gives access to the theme, and see selective opportunities in sukuk, infrastructure-linked REITs and emerging markets that underpin the AI supply chain. We treat AI as a diversified, portfolio-wide opportunity, not a narrow tech trade.

As dividend yields decline and growth companies dominate markets, buybacks have become a key but often overlooked source of shareholder returns, especially in the US. We see them as a structural shift in capital return, offering long-term ownership gains and potential tax efficiency, but value creation depends on disciplined execution at reasonable valuations.

REIT returns are not driven by rates alone but by broader macro conditions. Based on detailed historical analysis we use REITs as diversifiers and downside hedges rather than core return drivers, and in our balanced portfolios tactically raised global REIT exposure from 4% to 7% in December 2025.

Asset Allocation Guide — Q3 2026

Our strategic and tactical positioning by asset class. Overall we express an overweight risk stance via equities relative to credit.

Asset class	Strategic view	Tactical view	Commentary
Overall risk appetite	Neutral	Overweight	Positive approach to risk assets — research highlights attractive returns post geopolitical events.
Equities — overall	Neutral	Overweight	We express our overweight risk stance via equities relative to credit.
US	Neutral	Neutral	Neutral.
Europe	Neutral	Neutral	Neutral.
Emerging markets	Neutral	Neutral	Neutral.
Japan	Neutral	Overweight	Overweight based on the positive trend (and importance) of corporate governance and return on equity from a historically low base.
GCC	Neutral	Neutral	Neutral allocation — a useful diversifier from technology-dominated global markets.
REITs	Neutral	Overweight	Overweight based on attractive valuations and a stabilised office and retail sector. An attractive diversifier vs global equities.
Sukuk	Neutral	Underweight	Underweight both duration (maturity) risk and outright exposures. Favouring equities.
Trade finance	Neutral	Underweight	Underweight in our global discretionary mandates reflecting the current liquidity profile. Attractive as an income stream in a standalone closed-ended fund.
Gold	Overweight	Neutral	Maintain robust strategic positions, seeking to ride out current short-term volatility.
Money markets	Neutral	Underweight	Underweight — focused on risk assets.

Hyperscaler Capital Expenditure

The five largest US technology companies have committed USD 700 billion of capital expenditure for 2026, nearly 70% more than in 2025 and the largest private technology investment cycle in history. Industry estimates put total AI infrastructure spending at USD 5–8 trillion by 2030.

Microsoft
Amazon
Alphabet
Meta
Oracle

202

234

314

454

690

2022 2023 2024 2025A 2026E

View data table

Year	Microsoft	Amazon	Alphabet	Meta	Oracle
2022	55	63	40	32	12
2023	67	68	46	38	15
2024	96	82	63	55	18
2025A	130	120	100	78	26
2026E	165	200	180	105	40

USD billions. 2026 figures are the midpoint of guided ranges; capital expenditure CAGR of 35.95% over 2022–2026. Source : KFH Capital Wealth Insights, Q3 2026 · As of 1 July 2026

The K-Shaped Equity Market

AI enablers have returned +128% since January 2024 against +43% for the S&P 500 and −7% for broad non-AI sectors. The ten largest S&P 500 companies now account for roughly 40% of the index, and US equities trade at 23x forward earnings against 14x for the FTSE.

AI Enablers
AI Adopters
S&P 500
Broad non-AI sectors

View data table

Period	AI Enablers	AI Adopters	S&P 500	Broad non-AI sectors
Jan 2024	100	100	100	100
Jan 2025	148	130	120	103
Apr 2026	228	164	143	93

AI Enablers: technology, semiconductors, data-centre infrastructure. AI Adopters: financials and healthcare deploying AI. Source : KFH Capital Wealth Insights, Q3 2026 · As of 1 July 2026

AI Exposure Across Fixed Income

About USD 400 billion of bonds could be issued in 2026 to fund AI infrastructure, 10–15% of expected corporate issuance. Sukuk investors are less exposed to this concentrated issuance, but can participate through infrastructure-linked and asset-backed sukuk in the GCC and Asia.

Segment	AI / tech exposure	Default risk	Spread vs UST
Investment-grade corporates	~17%	<1%	+105 bps
High-yield bonds	~8.3%	~3%	+281 bps
Private credit (direct lending)	~30–40%	~5%	+500–700 bps
Leveraged loans	~20%	8–15%	+420 bps
Data centre ABS / CMBS	~100%	Moderate	+180–250 bps
EM hard-currency sovereign	Low	Low	+350–420 bps

Commodities: The Hidden Beneficiary

AI is a physical phenomenon: every data-centre inference cycle needs electricity, cooling, copper and steel. US data-centre electricity use is projected to triple from 176 TWh in 2023 to 325–580 TWh by 2028, and copper has nearly doubled in price over 18 months.

+165%

+88%

+74%

+62%

+45%

+38%

+12%

Gold Copper Nuclear ETF (NLR) Uranium Natural gas Aluminium Brent crude

View data table

Commodity	Change vs 5-year average (%)
Gold	+165
Copper	+88
Nuclear ETF (NLR)	+74
Uranium	+62
Natural gas	+45
Aluminium	+38
Brent crude	+12

Source : KFH Capital Wealth Insights, Q3 2026 · As of 1 July 2026

AI Supercycle Risk Register

Probability and portfolio impact of the risks that could derail the cycle (Q3 2026). The main risk is the revenue gap between capital expenditure and AI revenue; assessments are subjective estimates for illustration.

Risk factor	Probability	Impact (/100)	Category
Revenue gap (capex > revenue)	72%	78	High
US mega-cap concentration	80%	65	High
Private credit defaults	65%	72	High
Power grid constraint	55%	55	Medium
Taiwan Strait disruption	28%	92	High (low probability)
"Metaverse moment" — ROI failure	32%	85	High (low probability)
China AI rivalry	62%	50	Medium
Regulatory / antitrust	70%	40	Structural

Dividend Yield vs Buyback Yield

Distribution via buybacks has typically exceeded the dividend yield across the US market. A company worth USD 100 million that buys back USD 5 million of its shares has a buyback yield of 5%: each remaining investor's ownership stake rises, a hidden distribution that can also be more tax efficient than cash dividends.

Dividend yield
Buyback yield

6.0%

4.5%

3.1%

3.5%

4.7%

3.5%

3.2%

3.1%

2018 2019 2020 2021 2022 2023 2024 2025

View data table

Year	Dividend yield (%)	Buyback yield (%)
2018	2.2	3.8
2019	1.8	2.7
2020	1.5	1.6
2021	1.3	2.2
2022	1.8	2.9
2023	1.5	2.0
2024	1.3	1.9
2025	1.2	1.9

Source : KFH Capital Wealth Insights, Q3 2026 · As of 1 July 2026

Buybacks in Numbers

+827%

Apple's capital return over the ten years to end-2025

USD 850bn

Apple shares repurchased over the same decade, lifting a 1.0% stake to about 1.5%

12.08%

Invesco Global Buyback ETF annualised return 2016–2026, against 12.07% for the iShares MSCI World ETF

Returns During Fed Easing Cycles

Annualised returns of the S&P 500 and FTSE REITs total return indices across US easing cycles. Equities averaged 17.8% and REITs 11.3%, but REITs delivered 16.1% through the 2001–04 dot-com downturn while equities fell 4.2%.

S&P 500 TR
FTSE REITs TR

12.0% 11.9%

26.9% 27.2%

46.8% 5.1%

-4.2% 16.1%

6.1% 5.4%

18.0% 9.4%

18.8% 3.7%

17.8% 11.3%

1989–94 1995–97 1998–99 2001–04 2007–15 2019–22 2024–YTD Average

View data table

Easing cycle	S&P 500 TR (%)	FTSE REITs TR (%)
1989–94	12.0	11.9
1995–97	26.9	27.2
1998–99	46.8	5.1
2001–04	-4.2	16.1
2007–15	6.1	5.4
2019–22	18.0	9.4
2024–YTD	18.8	3.7
Average	17.8	11.3

Source : KFH Capital Wealth Insights, Q3 2026 · As of 1 July 2026

Returns During Fed Hiking Cycles

During hiking cycles the S&P 500 has averaged about 11.5% against 5.9% for REITs. Over the long term, monetary policy cycles alone are not the primary driver of portfolio returns.

S&P 500 TR
FTSE REITs TR

15.4% 1.2%

19.9% -2.8%

-1.4% 9.8%

10.4% 19.2%

13.3% 9.0%

11.3% -1.0%

11.5% 5.9%

1994–95 1997–98 1999–00 2004–07 2015–19 2022–24 Average

View data table

Hiking cycle	S&P 500 TR (%)	FTSE REITs TR (%)
1994–95	15.4	1.2
1997–98	19.9	-2.8
1999–00	-1.4	9.8
2004–07	10.4	19.2
2015–19	13.3	9.0
2022–24	11.3	-1.0
Average	11.5	5.9

Source : KFH Capital Wealth Insights, Q3 2026 · As of 1 July 2026

REITs vs Stocks by Rate Regime

Average returns since 1972 by Fed funds rate range. REITs have performed well in normal rate environments, and the FTSE REIT Index is up about 13.14% year to date in 2026.

REITs
Stocks

9.60% 13.00%

12.70% 7.30%

13.80% 14.50%

Below 3% 3% – 5.25% Above 5.25%

View data table

Fed funds rate regime	REITs (%)	Stocks (%)
Below 3%	9.60	13.00
3% – 5.25%	12.70	7.30
Above 5.25%	13.80	14.50

Source : KFH Capital Wealth Insights, Q3 2026 · As of 1 July 2026

Wealth Insights Library

Our quarterly Wealth Insights publications, each setting out the House View for the quarter ahead.

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House View — Q3 2026

The AI Supercycle: What It Means for Every Asset Class

The Hidden Yield: How Share Buybacks Are Reshaping Equity Returns

Interest Rate Cycles, Equities and REITs: A Historical Study

Asset Allocation Guide — Q3 2026

Hyperscaler Capital Expenditure

The K-Shaped Equity Market

AI Exposure Across Fixed Income

Commodities: The Hidden Beneficiary

AI Supercycle Risk Register

Dividend Yield vs Buyback Yield

Buybacks in Numbers

Returns During Fed Easing Cycles

Returns During Fed Hiking Cycles

REITs vs Stocks by Rate Regime

Wealth Insights Library

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