The Schroders Equity Lens for November 20261 opens with an alarm and closes with a steadying hand, and the tension between the two is the story. The team states that "Half of all global stocks are in a bear market." Then it asks readers to step back, because "perspective helps": "index-level damage is limited," the falls follow big run-ups, and most markets still carry double-digit 12-month returns.
Is the Earnings Engine Still Running?
Mostly, yes, with a crack showing. Schroders notes "The earnings upgrade cycle is losing momentum," with "more EM companies are being downgraded than upgraded." Yet "consensus earnings growth expectations remain high, especially US and EM," at 76% for emerging markets and 34% for the US in 2026. The team writes that "Forward P/E multiples have tumbled this year, dragging on returns even as earnings rose," so "some market scepticism about earnings sustainability is now priced in."
To be clear, the divergences matter. Emerging markets trade on a forward P/E of 9x, "hinging on those strong growth expectations," while "Fewer than 25% of EM stocks have outperformed this year." The equal-weighted index returns negative 2% against 14% for the cap-weighted one. Schroders says "Concentrated Taiwanese and Korean markets soared on the AI trade." In the US, the Magnificent 7 returns 7% against 14% for everything else, because "they are not and never have been a homogenous block."
What Is the Retirement Machine?
This is the report's central idea. Schroders argues that "The technology driving the market could eventually weaken one of the market’s most dependable sources of demand." US DC and IRA assets total $33 trillion, roughly all non-US equity markets combined. The report states "Nearly $1 trillion of annual contributions of which an estimated nearly $0.5 trillion ends up in US equities," and contributions "arrive month after month, irrespective of valuations, geopolitics, sentiment." In 2024, that flow equals 35 cents for every dollar of net demand from every other major buyer.
Who funds it? Schroders answers: "Contributions are concentrated among higher earners." The team finds "44% of contributions go to the best-paid 20%," and "higher earners could be responsible for around 60% of contributions," or an estimated $210 billion to $287 billion into US equities in 2024.
Here AI enters. "Software employment among younger workers has tumbled even as it’s risen at more experienced levels." The risk is not hypothetical, since a 25-year-old software engineer on $140,000 "sits comfortably in the top quintile of all US earners." Schroders models 10% unemployment by 2030 in its AI boom scenario, and cites an Anthropic scenario of 12% unemployment, "one of several scenarios, not a prediction."
Does Fear Pay?
Not historically. "Market declines are likely, not unusual": 10% falls breach 31 times in 54 years, 20% falls 13 times. "Selling when volatility rises has been damaging to your wealth," as $100 fully invested grows to $3,941, against $825 for an investor who moves to cash when the VIX runs above average. Equities, the team adds, "have been less risky than cash when it comes to delivering long-term inflation-beating returns."
Where Does the Hedge Live?
Schroders says "Consider value equities as a hedge against AI-risk, without sacrificing equity exposure." When semiconductors fall more than 5%, they return a median negative 15% while pure value returns negative 1%. But "Buyer beware: most passive approaches to value investing are unlikely to shield you from AI/tech risk." Value leads growth, 19% to 4% in the US, and "Japan leads the way across all major styles." Meanwhile "Small caps are cheap vs large," and "The UK is much more defensive."
The conclusion writes itself. The market's strongest tailwind, patient retirement money, depends on the same high earners AI most threatens. It is not a reason to sell. It is a reason to own differently.
Five Key Takeaways for Advisors and Investors
- Keep perspective. Half of stocks sit in a bear market, yet index damage is modest.
- Know the hidden buyer. Retirement flows put roughly $0.5 trillion a year into US equities.
- Stress-test client income. High earners in AI-exposed fields fund the bid.
- Do not sell on volatility. Moving to cash cost 4.6 points a year.
- Check what "value" holds. Passive value funds can carry the AI risk.
Footnote:
1 Schroders Equity Lens Team. Schroders Equity Lens: November 2026. Schroders, Nov. 2026, https://theideafarm.com/wp-content/uploads/2026/11/schroders-equity-lens-november-2026.pdf. Accessed 11 Nov. 2026.
