February investment report: Staying focused on global growth
Welcome to February’s edition of the True Potential Investment Report, where we break down the latest movements across global markets and the economic trends shaping investor portfolios.
Key themes at a glance:
- A resilient backdrop: The global economy continues to hold up well, even amid unpredictable US trade and foreign policy decisions.
- US growth remains solid: Strong company results, fiscal stimulus and ongoing innovation continue to support US economic momentum, although the jobs market is beginning to cool.
- Europe shows signs of improvement: Economic conditions in Europe are gradually strengthening, with Germany preparing to move forward with planned spending measures.
- Equities still look appealing: Companies – especially in the US – are rewarding investors faith in their resilience and ability to innovate.
Global economic backdrop
The global backdrop remains robust, despite ongoing volatility in US trade and foreign policy. Equity markets remain close to all‑time highs, and volatility has eased significantly. Businesses have managed to preserve pricing power and protect margins, even in sectors affected by recent trade tensions.
However, the US Supreme Court’s decision to strike down President Trump’s tariff measures introduces a fresh wave of uncertainty for global companies and financial markets. This could result in higher long-term bond yields as investors reassess the fiscal outlook.
US outlook
The US economy continues to show encouraging strength, helped by fiscal stimulus from the One Big Beautiful Bill Act, high levels of corporate investment – especially in artificial intelligence – and solid company profits, all of which are contributing to healthy productivity gains. However, the labour market is beginning to cool, and consumers are showing slightly more cautious behaviour. With midterm elections on the horizon, the administration is also expected to focus more closely on affordability challenges.
European outlook
Across Europe, the economic outlook is slowly brightening. While growth remains weaker than in the US, momentum is improving as several supportive forces come together. Germany appears ready to move ahead with its planned fiscal spending, which should help stimulate activity across the region. At the same time, lower energy prices, reduced interest rates and excess Chinese goods are continuing to help.
Equities and valuations
Although some parts of the market still look expensive and short‑term dips are possible, the overall picture is becoming more balanced. But although there is heightened risk in the technology sector, we expect the market to become more discerning in separating the winners and losers from the AI boom.
We’re also seeing stronger earnings growth beyond the big tech names, especially among US small and mid‑sized companies. And while certain non‑US markets appear priced on the high side, accelerating earnings growth may help to justify these.
Our positioning
We continue to hold a modestly higher allocation to equities, with a particular preference for companies listed outside the US, where we see broader opportunities. At the same time, we remain alert to the need for companies to deliver earnings that justify their current valuations.
In the bond market, value is limited overall, but UK gilts currently look more attractive than US Treasuries, especially given recent shifts in fiscal outlook and inflation expectations. When it comes to alternative investments, a careful, selective approach is important, so we’re maintaining a neutral stance for now. We favour an underweight in cash.
With investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest.
This material is not a personal recommendation or financial advice and the investments referred to may not be suitable for all investors.
Opinions, interpretations and conclusions represent the views of True Potential Investments at the date of publication and are subject to change. Forecasts are not a reliable indicator of future results.
All data sourced from Bloomberg L.P. (26/02/2026)
True Potential Investments LLP is authorised and regulated by the Financial Conduct Authority. FRN 527444. Registered in England and Wales as a Limited Liability Partnership No. OC356027.
True Potential LLP is registered in England and Wales as a Limited Liability Partnership No. OC380771.
