Market Know-How 1Q 2026

Key Takeaways

Macro tailwinds ahead

2026 is likely to be characterized by strong global growth, normalizing inflation and sustained AI-driven capital investment.

Markets in the fast lane

We are constructive on risk assets with a preference for equities as current credit spreads offer limited compression potential.

Brace for volatility

While the macro backdrop is supportive of risk assets, markets have in many ways run ahead of the economy, so expect wide tails and clusters of volatility.

(A)Ideas for 2026

AI is already transforming economies and financial markets; its ultimate trajectory remains the central question for investors.

Billions of dollars are flowing into AI models, data, and compute globally. This AI-driven capex from creators, enablers, and users of AI is reshaping investment opportunities, necessitating the scaling of traditional infrastructure (energy, transmission, and data connectivity) and swift capital reallocation across sectors and regions.

The dramatic expansion of AI's application and penetration over the past two years is poised to continue, in our view. This comes with the potential for substantial labor productivity gains, stronger early adopter margins, and significant capital reallocation to AI-intensive models. However, uneven adoption across economies, sectors, and firms will generate both alpha opportunities and new risks.

In this edition of the Market Know-How we highlight some of the areas where we see near-term implications for investors grappling with the consequences of AI as we head into 2026. In particular, we:

Highlight which Emerging Markets are currently the most integral to the global AI ecosystem and set of supply chains.
Map the critical infrastructure buildout required to support AI—and the associated investment opportunities.
Consider the implications of AI on fixed income markets through its possible impact on key macro variables.

AI is not a distant prospect; it is a present macro and market force. For investors, we believe this calls for a deliberate recalibration of exposures to reflect AI’s large and rapidly growing footprint in the global economy and financial markets.

Short-Term Macro Themes

We expect global growth to remain robust in 2026, underpinned by reduced trade-policy uncertainty, a supportive fiscal stance, accommodative financial conditions, and sustained AI-driven capital investment.

Onwards and upwards

We expect a continued expansion of global economic growth in 2026, with most major economies contributing to above-trend growth. In the US, activity should stay robust, underpinned by strong AI-related capital expenditure, still-easy financial conditions, and a positive fiscal impulse from the "One Big Beautiful Bill". In the Euro area, growth looks set to run above potential as the region continues to prove resilient in the face of lingering trade uncertainty. The German fiscal stimulus, a still-healthy labor market, reduced trade-policy headwinds, and supportive credit flows should collectively sustain domestic demand and investment. In the UK, a fiscal drag and the prospect of sluggish real income growth might dampen growth, but monetary policy easing is likely to support consumption, and UK exports could benefit from a global synchronized re-acceleration. Japan is also poised for another year of solid performance, with domestic demand in the driver’s seat: a tight labor market, powerful incentives to invest in labor-saving technologies, and targeted fiscal measures should keep growth on a firm footing.

Growth in sync, policy out of step

Against this macro backdrop, monetary policy is likely to remain a key differentiator across economies. In the US, we expect the Fed to cut rates further in 2026, but above-trend growth argues for only limited additional easing. That said, the appointment of a dovish new Fed Chair could point to somewhat more room for cuts, depending on the extent to which the new Chair manages to convince the rest of the FOMC of their policy views.
After resuming its easing cycle in December, the BoE is also likely to cut rates further to a terminal rate of 3%, as inflation risks are more balanced following a more conservative Autumn Budget.
By contrast, the ECB may well stay on hold for an extended period, with any further cut requiring a clear catalyst such as a material downside growth surprise or a sharp euro appreciation. While not our base case, if the recovery were to gain traction, rate hikes could return to the discussion in the second half of 2026.
In Japan, continued reflation progress supports our call for continued modest tightening by the BoJ, particularly if the Shunto negotiations confirmed firmer wage growth heading into 2026 and/or yen weakness amplified imported inflationary pressures.

China’s new model

We expect China's growth to remain robust in 2026, supported by its strategic focus on high-tech manufacturing and the development of a modern industrial system.
Over the past two years, Chinese exports have accounted for more than half of headline real GDP growth, showcasing remarkable resilience even in the face of steep US tariffs. The proposal for the 15^th Five-Year Plan (2026–30), approved at the 4^th Plenum in late October, signals that Beijing is doubling down on this strategy. Xi’s dual-circulation agenda is designed to deepen global dependence on China’s supply chains while making China more self-reliant and less import-intensive—a clear departure from the country’s earlier growth model.
On the back of this shift, our China team has raised its forecast for real GDP growth in 2026-30 to an annual average of 4.5%, compared to 4.0% before.¹

“

The 2026 backdrop is constructive, but several key risks could still materially reshape the economic and market outlook over the next year.”

Simona Gambarini

Senior Market Strategist, Strategic Advisory Solutions

It’s mostly fiscal

We expect fiscal policy to remain in focus in 2026, with a new economic package in Japan, federal spending accelerating in Germany and potential new measures to be announced in the US ahead of the Midterm elections.
In Japan, the Cabinet approved the new ruling coalition's economic package with a supplementary budget of ¥17.7 trillion (~2.8% of GDP) at the end of 2025, up from ¥13.9 trillion in 2024. The package consists of four pillars, led by measures to address high prices but also including crisis management and growth investments, strengthening defense capabilities, and reserve funds. As the supplementary budget includes many items for which actual spending will be delayed until FY2026 or beyond, we expect it to increase the fiscal deficit this year.
In Germany, we continue to anticipate a pick-up in fiscal spending, which underpins our positive view on Euro area growth more generally. However, the pace of fiscal spending in October and November, the first two months after the 2025 German budget was passed, was substantially below what required to meet budget targets.
Finally, in the US, the One Big Beautiful Bill Act is expected to provide a much-needed boost to consumers. While not our base case, additional fiscal support could be announced in the coming months. For example, in early November, President Trump floated the idea of issuing a $2,000 dividend to middle- and lower-income individuals from the tariff revenues collected.

Bridging consumer weakness

A significantly weaker US labor market remains a key risk in 2026. The current low-hiring/low-firing equilibrium limits immediate pain but carries a real risk of a sharper, reflexive adjustment down the road.
For now, heavy AI-related investment and resilient spending by high-income households (which account for roughly 40% of total consumption) are bridging this soft patch. However, we believe the US Administration may need to focus on lifting real incomes for lower-paid workers in 2026, as the tax relief from the One Big Beautiful Bill Act is likely to disproportionately benefit individuals on the higher-end of the income distribution.

US fiscal stimulus expected to boost real income growth for mid-upper incomes

Source: Goldman Sachs Asset Management and Goldman Sachs Global Investment Research. As of January 5, 2026.

AI to the rescue?

While we are yet to see a broad-based productivity boost from AI adoption, AI-related investment is already having an impact on US GDP growth: AI-related spending accounted for almost one percentage point of US real GDP growth in H1 2025. Without it, US GDP would have almost flat-lined.
Hyperscalers capex is expected to reach $540 billion in 2026,² with Nvidia’s CEO Jensen Huang anticipating $3-4 trillion of AI infrastructure spending by 2030.³ However, rising debt issuance by hyperscalers, and the increasing circularity of the AI ecosystem are raising concerns about the sustainability of growth expectations in the sector, especially considering already high valuations and the limitations stemming from the ability to scale up energy production in the short term.

Long-Term Macro Themes

In our view, the next economic cycle will be characterized by higher inflation, elevated interest rates and heightened macroeconomic volatility, driven by six key factors. We believe investors need to position their portfolios for CHANGE.

CHANGE

Climate transition – High level of debt – Ageing demographics – New finance – Global fragmentation – Evolving technology

Global private investment in AI by country (2024)

Source: 2025 AI Index Report, IMF World Economic Outlook and Goldman Sachs Asset Management. As of January 1, 2026.

We believe AI has the potential to significantly alter both the economic and investment landscape. The headline contribution to activity so far largely reflects capacity build-out rather than broad-based productivity improvements. Unsurprisingly, AI-related investment has been overwhelmingly dominated by the US, followed with a large gap by China. This concentration means the immediate boost to real GDP is primarily investment-led and geographically uneven.
Recent industry surveys already show a significant pick-up in AI adoption in the US and in China with pockets of efficiency gains, but by and large companies remain in the early innings of AI adoption. Translating capital spending into sustained output-per-worker gains is typically a multi-year process that requires diffusion, reskilling and complementary investment.
Cross-country differences in AI capex, both in scale and composition, suggest that productivity paths may diverge over time. Economies with deeper innovation ecosystems, supportive regulation and strong digital infrastructure may be better positioned to capture efficiency gains, while others could see more modest impacts.
From an investment perspective, so far, the sheer scale of AI-related capex has primarily supported stocks exposed to the infrastructure build-out. The process of AI adoption remains early, but large companies report more progress so far than smaller firms. We believe market focus will soon turn to AI-enablers and applications. With this in mind, we believe there is an attractive opportunity beyond the large US big tech companies as AI broadens out, particularly in the small cap space and EMs.
More generally, we think it is important for investors to consider dedicated allocations to technology going forward given the acceleration and pace of the industry's disruption, leading to potential wealth creation opportunities.

Market Themes

We are constructive on risk assets with a preference for equities as current credit spreads offer limited compression potential. We see stronger returns in EM equities driven by superior earnings growth and more attractive valuations. Even with fiscal concerns, we believe core fixed income can offer portfolio diversification given reduced inflation risk and steeper yield curves. Amid further monetary easing and healthy global growth, we expect the US dollar to decline modestly.

Upside scenario #1: Productivity boom

AI boosts productivity faster and further than expected, leading the global economy (led by the US) to experience a new era of rapid economic growth, potentially reaching levels not seen since the late 1990s.

Key Implications: Global tech surges, followed by EM equities. Inflation stays in check, a result of the disinflationary impact from enhanced productivity. This allows for higher revisions in economic potential growth, which in turn keeps long-duration bond yields elevated.

Upside scenario #2: Russia/Ukraine ceasefire

Energy prices fall with the recovery in Ukrainian production capacity and potential removal of sanctions on Russia, while European growth accelerates via higher real income and improved consumer and business confidence.

Key Implications: European (DM and EM) equities rally on the back of a valuation boost and higher expected earnings from the reconstruction of Ukraine. Given the extent of the reconstruction job, European credit and financials may also benefit, as well as infrastructure.

Downside scenario #1: AI disappointment

Tech capex is scaled down significantly as businesses question the viability of current AI expectations. The US economy slows as corporates scale back investment and the stock market sells off, creating negative wealth effect and prompting higher-income consumers to slow spending.

Key Implications: Global equities experience a correction while defensive sectors, such as Healthcare, and high-dividend stocks stay more resilient. European equities outperform given lower exposure to the AI theme. Long-dated government bonds and liquid alternatives help reduce the overall portfolio drawdown.

Downside scenario #2: Germany letdown

The German government underdelivers on its infrastructure and defense budget, perhaps because of political divide, weighing on confidence. Germany grows below expectations, dragging down growth in the Euro area more broadly.

Key Implications: European domestically exposed stocks come under pressure as lower Euro area growth is priced in. European core fixed income provides some buffer: duration rallies as more cuts by the ECB are discounted.

“

The technology complex within EM has been at the leading edge of advancing manufacturing and has produced AI models with similar capabilities to DM peers at fractions of the cost.”

Mithran Sudhir

Head of Fundamental Equity EMEA Client Portfolio Management

Emerging Market Equities

SOLUTION

AI's hidden engine

The global surge in AI, cloud computing, and digital infrastructure is unlocking powerful growth opportunities—placing emerging markets at the center of this structural shift. The US may lead in AI capital expenditure, but this transformation depends on the manufacturing strength and supply-chain depth of EMs. Around 70% of YTD global exports of semiconductors and AI hardware originate from EMs, making them crucial in enabling this global transformation. EM increased role in the AI supply chain has translated into a growing representation of tech in equity benchmarks, with the MSCI EM index’s IT sector weight rising from about 14% a decade ago to 27% today, at the detriment of more traditional sectors. The combination of manufacturing depth, significance in AI supply chains and lower valuations leaves EMs well placed to be long-term beneficiaries from this shift, in our view.

Broadening leadership

Asia was the key driver of EM outperformance in 2025, led by South Korea, Taiwan and China as hyperscalers’ capex and semiconductor demand fueled one of the strongest upcycles on record. 24-month forward EPS growth expectations suggest this momentum is likely to persist. Importantly, we believe the opportunity extends beyond Asia, with other regions likely to catch up as valuations remain below those of EM Asia. The structural depth of the EM technology ecosystem is a key differentiator—spanning not only chip manufacturing but also data center infrastructure, thermal management and power solutions. This breadth, combined with strong visibility of earnings, boosts confidence in the durability of these trends, in our view. For example, SK Hynix’s order books for next year are already full, signaling predictable revenue streams rather than speculative growth. In LatAm, fintech is emerging as a powerful theme, with companies such as NuBank and MercadoLibre leveraging technology to capture market share in a region with low penetration of financial products. These tech-centric business models, long associated with developed markets, are increasingly driving domestic consumption growth in EMs, reinforcing our conviction that the case for EM equities is structural rather than cyclical.

>70% of 2025* World exports of semis and AI hardware are from EMs

Source: ITC Trade Maps and Goldman Sachs Asset Management. As of January 5, 2026. *Includes data up to and including September 2025. Chart shows a sum of HS 8541, 8542, 8471 and 8473.

24-month forward EPS growth multiplied by MSCI EM country weights (USD)

Source: Bloomberg and Goldman Sachs Asset Management. As of January 5, 2026. Latest MSCI EM country weights data is December 31, 2025.

Rates

SOLUTION

A productivity anchor for real rates

Historically, long-term real interest rates have tended to track underlying productivity trends: periods of stronger productivity growth have coincided with firmer 10-year real yields, while persistent weakness in productivity helped push equilibrium real rates lower in the 2000s and 2010s. The mechanism is straightforward. Higher trend productivity makes capital more valuable, which, all else equal, puts upward pressure on the equilibrium real rate. However, the magnitude varies across countries, contingent on capital deepening, labor reallocation and structural policy. Recent market trends, shown by moves in forward real yields and term premia, already reflect a shift towards higher long-term real rates, as investors prepare for an AI-driven productivity boost. We believe this process to play out over the medium term and to unfold more fully over the coming decade.

An AI lift to yields

In our view, a realized productivity boost from AI would probably translate into higher 10-year bond yields over time via stronger potential growth and higher equilibrium real rates, though the timing and size of that repricing are uncertain and uneven across geographies. Under plausible productivity and inflation assumptions implied by AI adoption, potential 10-year yields could be materially higher in some markets—notably the US and the UK—and only modestly higher in others-like Japan and Germany. This cross-country divergence reflects differences in the scale of capex, digital infrastructure and the speed of adoption. Key risks that would blunt any repricing include slower adoption, labor frictions, and policy responses that offset productivity gains. We therefore favor measured positioning that hedges against both a gradual re-anchoring of long real rates and the short-term inflationary pressures that can accompany a front-loaded capex cycle.

G7 Productivity and yields over time (%)

Source: OECD and Goldman Sachs Asset Management. As of January 1, 2026. G7 productivity growth is calculated by taking a simple average of the 10-year moving average of productivity growth for each of the G7 countries. G7 Real 10-year yield is calculated by taking a simple average of the real 10-year yield for each of the G7 countries. This in turn is calculated by subtracting the 10-year moving average of inflation from the 10-year nominal yield. Please refer to the end of this publication for additional disclosures.

AI boost to long-term (LT) GDP growth (%)

Source: Goldman Sachs Global Investment Research, Macrobond and Goldman Sachs Asset Management. As of January 2, 2026. LT GDP Growth estimates based on the 10-year Real GDP growth forecasts produced by Goldman Sachs Global Investment Research. LT inflation based on 10-year inflation swaps. AI Boost to LT GDP Growth is based on a conservative interpretation of published estimates that account for continued technological progress that is already built into existing estimates of trend growth and a slowing Ex-AI productivity growth trend. This estimates a growth boost of 0.4pp in the US, 0.3pp on average in other DMs, and 0.2pp on average in advanced EMs by 2034. Please refer to the end of this publication for additional disclosures.

Infrastructure

SOLUTION

Digital infrastructure takes center stage

The AI revolution is still in its build-out stage and global infrastructure is leading the charge—underscored by rising deal values as investors position for transformative, long-term growth. A notable example is telecommunications, where deal value has tripled since 2018, driven by fiber, towers and data centers that enable cloud and AI adoption. These assets have become essential for connectivity and processing power as data volumes surge, and we expect their growing importance to modern economies to remain a key support for rising global deal values in the years ahead.

Powering the transition

The surge in infrastructure investment brings a critical challenge: the energy required to sustain it. As data centers scale and AI adoption accelerates, global electricity demand is set to rise sharply—data center consumption alone is expected to more than double by 2030, matching Japan’s current usage. Meeting this demand will require major upgrades to ageing grids and a balanced mix of traditional and renewable generation. We believe that electricity costs are another key factor that may help attract capital towards cost-efficient solutions powering the digital economy. At the same time, grid resilience, distributed generation, and energy-efficiency solutions are gaining prominence as policymakers and investors strive to align rapid digital growth with reliability and climate goals. In our view, this positions infrastructure not only as a critical enabler of technological progress but also as a long-term winner in the energy transition.

Global infrastructure deal value ($bn)

Source: Infralogic Rankings Report Q3 2025 and Goldman Sachs Asset Management. As of January 1, 2026. *The latest data is Q3 2025.

Increase in electricity demand by sector, Base Case, 2024-2030

Source: IEA and Goldman Sachs Asset Management. As of January 1, 2026. The estimates shown were published by the IEA in April 2025.

What Record ETF Flows Signal About Market Dynamics

ETF dominance reinforced

2025 marked a pivotal year for global capital markets, with ETFs emerging as a key indicator of structural change. Record inflows of nearly $2.1 trillion reflect deeper trends shaping investor behavior: the migration from traditional vehicles, generational wealth transfer, and growing demand for liquidity and transparency. These flows highlight how innovation within investment structures—rather than specific products—is redefining portfolio construction globally. While the US maintained its dominant share, capturing 71% of the inflows, Europe’s above-trend growth, attracting 19% of inflows versus 17% of AUM, signals a gradual narrowing of the gap, underscoring the global nature of this evolution.

Another record year for ETF inflows across the globe…

Source: Goldman Sachs Asset Management. As of December 31, 2025.

…with the bulk of flows going to US and European domiciled ETFs

Source: Goldman Sachs Asset Management. As of December 31, 2025.

Innovation in active ETFs

Perhaps the most notable development was the acceleration of active strategies within the ETF framework—a shift that speaks to investors’ appetite for flexibility and sophistication. Active ETFs, once a niche, now represent 10% of assets and captured nearly a third of flows in 2025. This trend reflects a broader move towards solutions that combine efficiency with alpha-seeking and risk management features, including options-based strategies. Regional variations are emerging: the US leads in derivative income ETFs, while Europe is seeing rapid adoption of buffer ETFs (options trading ETFs) designed for downside protection. These innovations illustrate how market architecture is evolving to meet complex investor objectives.

Active ETFs globally represent 10% of assets but nearly a third of flows

Source: Goldman Sachs Asset Management. As of December 31, 2025.

US leads in derivative income ETFs, buffer ETFs gaining traction in Europe

Source: Goldman Sachs Asset Management. As of December 31, 2025.

Looking ahead

The rise of ETFs—both passive and active—underscores a fundamental shift in how capital is allocated. Beyond product innovation, this trend signals a reconfiguration of market structure, liquidity dynamics, and investor priorities. As we look to 2026, the question is not whether ETFs will grow, but how their evolution will shape the broader investment ecosystem and influence global capital flows.

For a table on Relative Asset Class Calendar-Year Performance and our view on Short-to-Medium and Long Term potential solutions, we encourage you to download the full PDF.

¹Goldman Sachs Global Investment Research. China Matters: “Sticking with What Works: Raising GDP Forecast on China’s Manufacturing”, October 30, 2025.
²According to consensus estimates. Hyperscalers include AMZN, GOOGL, META, MSFT, ORCL.
³As of Nvidia's Q2 2025 conference call.

Author(s)

James Ashley

International Head of Strategic Advisory Solutions

Simona Gambarini

Senior Market Strategist, Strategic Advisory Solutions

Adrien Forrest

Senior Market Strategist, Strategic Advisory Solutions

Market Know-How 1Q 2026

In a world of macro and political uncertainty, we see ample prospects for investors to turn macro challenges into potential investment opportunities.

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Risk considerations and disclosures

Glossary

Equities

The Dow Jones US Select Real Estate Securities Index tracks companies that are both equity owners and operators of real estate in the US.

The FTSE 100 Index is the 100 most highly capitalised blue chips listed on the London Stock Exchange.

The GPR 250 REIT Index is a subset of the GPR 250 Index and covers all companies having a REIT-like structure. This in combination with the consistently applied rules for company inclusions results in the GPR 250 REIT Index being a sustainable representation of the global Real Estate Investment Trust market.

The MSCI Emerging Markets Equity Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.

The MSCI Europe Index captures large and mid-cap representation across 15 Developed Markets (DM) countries in Europe*. With 420 constituents, the index covers approximately 85% of the free float-adjusted market capitalization across the European Developed Markets equity universe.

The MSCI Japan Index is designed to measure the performance of the large and mid-cap segments of the Japanese market. With 217constituents, the index covers approximately 85% of the free float-adjusted market capitalization in Japan.

The MSCI World Small Cap Index captures small cap representation across 23 Developed Markets (DM) countries*. With 4,116 constituents, the index covers approximately 14% of the free float-adjusted market capitalization in each country.

The Russell 2000 Index measures the performance of the small-cap segment of the US equity universe. The Russell 2000 Index is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.

The S&P 500 Index is the Standard & Poor's 500 Composite Stock Prices Index of 500 stocks, an unmanaged index of common stock prices. The index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an unmanaged index.

The S&P Developed ex-US Property Index measures the performance of real estate companies domiciled in countries outside the United States.

The S&P Developed ex-US Small Cap Index covers the smallest 15% of companies from developed countries (excluding the US) ranked by total market capitalization.

Fixed Income

The Bloomberg US Aggregate Bond Index represents an unmanaged diversified portfolio of fixed income securities, including US Treasuries, investment grade corporate bonds, and mortgage backed and asset-backed securities.

The Bloomberg Global Aggregate Bond Index is a flagship measure of global investment grade debt from a multitude local currency markets. The index includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers.

The Bloomberg Global High Yield Index provides a broad-based measure of the global high-yield fixed income market.

The Credit Suisse Leveraged Loan Index tracks the investable leveraged loan market by representing tradable, senior-secured, US-dollar denominated, non-investment grade loans.

The ICE BofA 1-3 Month US Treasury Bill Index measures the performance of a single issue of outstanding treasury bill which matures closest to, but not beyond, three months from the rebalancing date.

The J.P. Morgan Emerging Markets Bond Index Global Core (EMBIG CORE) tracks liquid, US Dollar denominated emerging market fixed and floating rate debt instruments issued by sovereign and quasi-sovereign entities.

The J.P. Morgan CEMBI Broad Diversified Index tracks the performance of US dollar-denominated bonds issued by emerging market corporate entities.

The US Treasury Bond is a debt obligation backed by the United States government and its interest payments are exempt from state and local taxes. However, interest payments are not exempt from federal taxes.

Other

AI refers to Artificial Intelligence.

Basis points (bps) refers to a unit represented by one hundredth of one percent.

The Bloomberg Commodity Index offers liquid exposure to physical commodities via futures contracts and aims to produce an attractive risk-return profile over time while ensuring that no single commodity or sector dictates the investment.

CDU/CSU refers to Christian Democratic Union/Christian Social Union.

CEE refers to Central and Eastern Europe.

Core CPI refers to Core Consumer Price Index.

DM refers to Developed Markets.

ECB refers to European Central Bank.

EM refers to Emerging Markets.

ETF refers to Exchange-Traded Fund.

FX refers to Foreign Exchange.

GDP refers to Gross Domestic Product.

The HFRI Fund of Funds Composite Index is an equal weighted, net of fee, index composed of approximately 800 fund-of-funds which report to HFR.

The HFRX Macro CTA Index measures the performance of the hedge fund market where macro strategy managers trade a broad range of strategies. In these strategies, the investment process is predicated on movements in underlying economic variables and the impact these have on equity, fixed income, hard currency, and commodity markets.

MSCI ACWI refers to MSCI All Country World Index.

NATO refers to North Atlantic Treaty Organization.

PBOC refers to People's Bank of China.

PCE refers to Personal Consumption Expenditures.

P/E ratio refers to Price-to-Earnings ratio.

Percentage points (pp) refers to the unit for the arithmetic difference of two percentages.

Recession is defined by the NBER as a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

RoW refers to rest of the world.

RRR refers to Reserve Requirement Ratio.

SPD refers to Social Democratic Party of Germany.

YoY refers to Year-over-Year.

YTD refers to Year-to-Date.

Important Information

Equity securities are more volatile than fixed income securities and subject to greater risks. Small and mid-sized company stocks involve greater risks than those customarily associated with larger companies. Emerging markets investments may be less liquid and are subject to greater risk than developed market investments as a result of, but not limited to, the following: inadequate regulations, volatile securities markets, adverse exchange rates, and social, political, military, regulatory, economic or environmental developments, or natural disasters.

Investments in fixed-income securities are subject to credit and interest rate risks. Bond prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline in the bond's price. Credit risk is the risk that an issuer will default on payments of interest and principal. This risk is higher when investing in high yield bonds, also known as junk bonds, which have lower ratings and are subject to greater volatility. All fixed income investments may be worth less than their original cost upon redemption or maturity. Although Treasuries are considered free from credit risk, they are subject to interest rate risk, which may cause the underlying value of the security to fluctuate.

Exchange-Traded Funds are subject to risks similar to those of stocks. Investment returns may fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed, or sold, may be worth more or less than their original cost. ETFs may yield investment results that, before expenses, generally correspond to the price and yield of a particular index. There is no assurance that the price and yield performance of the index can be fully matched.

Investors should also consider some of the potential risks of alternative investments: Alternative Strategies. Alternative strategies often engage in leverage and other investment practices that are speculative and involve a high degree of risk. Such practices may increase the volatility of performance and the risk of investment loss, including the entire amount that is invested. Manager experience. Manager risk includes those that exist within a manager’s organization, investment process or supporting systems and infrastructure. There is also a potential for fund-level risks that arise from the way in which a manager constructs and manages the fund. Leverage. Leverage increases a fund’s sensitivity to market movements. Funds that use leverage can be expected to be more “volatile” than other funds that do not use leverage. This means if the investments a fund buys decrease in market value, the value of the fund’s shares will decrease by even more. Counterparty risk. Alternative strategies often make significant use of over-the-counter (OTC) derivatives and therefore are subject to the risk that counterparties will not perform their obligations under such contracts. Liquidity risk. Alternative strategies may make investments that are illiquid or that may become less liquid in response to market developments. At times, a fund may be unable to sell certain of its illiquid investments without a substantial drop in price, if at all. Valuation risk. There is risk that the values used by alternative strategies to price investments may be different from those used by other investors to price the same investments. The above are not an exhaustive list of potential risks. There may be additional risks that should be considered before any investment decision.

Concentration in infrastructure-related securities involves sector risk and concentration risk, particularly greater exposure to adverse economic, regulatory, political, legal, liquidity, and tax risks associated with MLPs and REITs. Investing in REITs involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. REITs whose underlying properties are concentrated in a particular industry or geographic region are also subject to risks affecting such industries and regions. The securities of REITs involve greater risks than those associated with larger, more established companies and may be subject to more abrupt or erratic price movements because of interest rate changes, economic conditions and other factors. Prospective investors should inform themselves as to any applicable legal requirements and taxation and exchange control regulations in the countries of their citizenship, residence or domicile which might be relevant.

An investment in private credit and private equities is not suitable for all investors. Investors should carefully review and consider the potential investments, risks, charges, and expenses of private equity before investing. They are speculative, highly illiquid, involve a high degree of risk, have high fees and expenses that could reduce returns, and subject to the possibility of partial or total loss of capital. They are, therefore, intended for experienced and sophisticated long-term investors who can accept such risks.

Private equity and private credit investments are speculative, highly illiquid, involve a high degree of risk, have high fees and expenses that could reduce returns, and subject to the possibility of partial or total loss of fund capital; they are, therefore, intended for experienced and sophisticated long-term investors who can accept such risks.

This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. This material has been prepared by Goldman Sachs Asset Management and is not financial research nor a product of Goldman Sachs Global Investment Research (GIR). It was not prepared in compliance with applicable provisions of law designed to promote the independence of financial analysis and is not subject to a prohibition on trading following the distribution of financial research. The views and opinions expressed may differ from those of Goldman Sachs Global Investment Research or other departments or divisions of Goldman Sachs and its affiliates. Investors are urged to consult with their financial advisors before buying or selling any securities. This information may not be current and Goldman Sachs Asset Management has no obligation to provide any updates or changes.

Economic and market forecasts presented herein reflect a series of assumptions and judgments as of the date of this document and are subject to change without notice. These forecasts do not take into account the specific investment objectives, restrictions, tax and financial situation or other needs of any specific client. Actual data will vary and may not be reflected here. These forecasts are subject to high levels of uncertainty that may affect actual performance. Accordingly, these forecasts should be viewed as merely representative of a broad range of possible outcomes. These forecasts are estimated, based on assumptions, and are subject to significant revision and may change materially as economic and market conditions change. Goldman Sachs has no obligation to provide updates or changes to these forecasts. Case studies and examples are for illustrative purposes only.

There may be additional risks that are not currently foreseen or considered.

Past performance does not guarantee future results, which may vary. The value of investments and the income derived from investments will fluctuate and can go down as well as up. A loss of principal may occur.

Capital is at risk.

The portfolio risk management process includes an effort to monitor and manage risk but does not imply low risk.

Prospective investors should inform themselves as to any applicable legal requirements and taxation and exchange control regulations in the countries of their citizenship, residence or domicile which might be relevant.

This material is provided for informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. This material is not intended to be used as a general guide to investing, or as a source of any specific investment recommendations, and makes no implied or express recommendations concerning the manner in which any client’s account should or would be handled, as appropriate investment strategies depend upon the client’s investment objectives.

Index Benchmarks

Indices are unmanaged. The figures for the index reflect the reinvestment of all income or dividends, as applicable, but do not reflect the deduction of any fees or expenses which would reduce returns. Investors cannot invest directly in indices.

The indices referenced herein have been selected because they are well known, easily recognized by investors, and reflect those indices that the Investment Manager believes, in part based on industry practice, provide a suitable benchmark against which to evaluate the investment or broader market described herein.

THIS MATERIAL DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION WHERE OR TO ANY PERSON TO WHOM IT WOULD BE UNAUTHORIZED OR UNLAWFUL TO DO SO.

Views and opinions expressed are for informational purposes only and do not constitute a recommendation by Goldman Sachs Asset Management to buy, sell, or hold any security. Views and opinions are current as of the date of this document and may be subject to change, they should not be construed as investment advice.

Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. It should not be assumed that investment decisions made in the future will be profitable or will equal the performance of the securities discussed in this document.

Neither MSCI nor any other party involved in or related to compiling, computing, or creating the MSCI data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability, or fitness for a particular purpose with respect to any of such data. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the MSCI data is permitted without MSCI’s express written consent.

Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. We have relied upon and assumed without independent verification, the accuracy and completeness of all information available from public sources.

United States: In the United States, this material is offered by and has been approved by Goldman Sachs Asset Management, L.P., which is a registered investment adviser with the Securities and Exchange Commission.

United Kingdom: In the United Kingdom, this material is a financial promotion and has been approved by Goldman Sachs Asset Management International, which is authorized and regulated in the United Kingdom by the Financial Conduct Authority.

European Economic Area (EEA): This financial promotion is provided by Goldman Sachs Asset Management B.V. This marketing communication is disseminated by Goldman Sachs Asset Management B.V., including through its branches (“GSAM BV”). GSAM BV is authorised and regulated by the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten, Vijzelgracht 50, 1017 HS Amsterdam, The Netherlands) as an alternative investment fund manager (“AIFM”) as well as a manager of undertakings for collective investment in transferable securities (“UCITS”). Under its licence as an AIFM, the Manager is authorized to provide the investment services of (i) reception and transmission of orders in financial instruments; (ii) portfolio management; and (iii) investment advice. Under its licence as a manager of UCITS, the Manager is authorized to provide the investment services of (i) portfolio management; and (ii) investment advice. Information about investor rights and collective redress mechanisms are available on www.gsam.com/responsible-investing (section Policies & Governance). Capital is at risk. Any claims arising out of or in connection with the terms and conditions of this disclaimer are governed by Dutch law.In the European Union, this material has been approved by either Goldman Sachs Asset Management Funds Services Limited, which is regulated by the Central Bank of Ireland or Goldman Sachs Asset Management B.V, which is regulated by The Netherlands Authority for the Financial Markets (AFM).

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Australia: This material is distributed by Goldman Sachs Asset Management Australia Pty Ltd ABN 41 006 099 681, AFSL 228948 (‘GSAMA’) and is intended for viewing only by wholesale clients for the purposes of section 761G of the Corporations Act 2001 (Cth). This document may not be distributed to retail clients in Australia (as that term is defined in the Corporations Act 2001 (Cth)) or to the general public. This document may not be reproduced or distributed to any person without the prior consent of GSAMA. To the extent that this document contains any statement which may be considered to be financial product advice in Australia under the Corporations Act 2001 (Cth), that advice is intended to be given to the intended recipient of this document only, being a wholesale client for the purposes of the Corporations Act 2001 (Cth). Any advice provided in this document is provided by either of the following entities. They are exempt from the requirement to hold an Australian financial services licence under the Corporations Act of Australia and therefore do not hold any Australian Financial Services Licences, and are regulated under their respective laws applicable to their jurisdictions, which differ from Australian laws. Any financial services given to any person by these entities by distributing this document in Australia are provided to such persons pursuant to the respective ASIC Class Orders and ASIC Instrument mentioned below.

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• Goldman Sachs Asset Management International (GSAMI), Goldman Sachs International (GSI), pursuant to ASIC Class Order 03/1099; regulated by the Financial Conduct Authority; GSI is also authorized by the Prudential Regulation Authority, and both entities are under UK laws.

• Goldman Sachs Asset Management (Singapore) Pte. Ltd. (GSAMS), pursuant to ASIC Class Order 03/1102; regulated by the Monetary Authority of Singapore under Singaporean laws

• Goldman Sachs Asset Management (Hong Kong) Limited (GSAMHK), pursuant to ASIC Class Order 03/1103 and Goldman Sachs (Asia) LLC (GSALLC), pursuant to ASIC Instrument 04/0250; regulated by the Securities and Futures Commission of Hong Kong under Hong Kong laws

No offer to acquire any interest in a fund or a financial product is being made to you in this document. If the interests or financial products do become available in the future, the offer may be arranged by GSAMA in accordance with section 911A(2)(b) of the Corporations Act. GSAMA holds Australian Financial Services Licence No. 228948. Any offer will only be made in circumstances where disclosure is not required under Part 6D.2 of the Corporations Act or a product disclosure statement is not required to be given under Part 7.9 of the Corporations Act (as relevant).

FOR DISTRIBUTION ONLY TO FINANCIAL INSTITUTIONS, FINANCIAL SERVICES LICENSEES AND THEIR ADVISERS. NOT FOR VIEWING BY RETAIL CLIENTS OR MEMBERS OF THE GENERAL PUBLIC.

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Japan: This material has been issued or approved in Japan for the use of professional investors defined in Article 2 paragraph (31) of the Financial Instruments and Exchange Law (“FIEL”). Also, Any description regarding investment strategies on collective investment scheme under Article 2 paragraph (2) item 5 or item 6 of FIEL has been approved only for Qualified Institutional Investors defined in Article 10 of Cabinet Office Ordinance of Definitions under Article 2 of FIEL.

Kuwait: This material has not been approved for distribution in the State of Kuwait by the Ministry of Commerce and Industry or the Central Bank of Kuwait or any other relevant Kuwaiti government agency. The distribution of this material is, therefore, restricted in accordance with law no. 31 of 1990 and law no. 7 of 2010, as amended. No private or public offering of securities is being made in the State of Kuwait, and no agreement relating to the sale of any securities will be concluded in the State of Kuwait. No marketing, solicitation or inducement activities are being used to offer or market securities in the State of Kuwait.

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Compliance code: 481821-OTU-2439774

Date of first use: January 15, 2026