Franklin Templeton's latest Global Investment Management Survey, released in August 2026, projects the S&P 500 could finish the year at 7,400–7,800, a range that tops most Wall Street forecasts. The firm's median outlook, based on responses from roughly 200 portfolio managers, research directors, and chief investment officers, also calls for U.S. real GDP growth of 2.5% in 2026, exceeding the Federal Reserve's June projection of 2.2%, the IMF's 2.3%, and the Bloomberg consensus of 2.1%.
The survey, conducted through May 2026 and compiled by the Franklin Templeton Institute under Chief Market Strategist Stephen Dover, reflects a broadly optimistic view on global growth. For Europe, the firm's median forecast is 1.5% real GDP, well above the IMF's 0.9% and Bloomberg's 0.6%. China is expected to grow 4.5%, slightly below the 4.6% consensus. Inflation, as measured by core PCE, is seen ending the year at 3.0%–3.5%, in line with current readings but still above the Fed's 2% target. The survey does not foresee a U.S. recession in 2026.
On equities, the survey's S&P 500 target is paired with an earnings growth forecast of over 15%, notably more conservative than the 29.7% FactSet consensus. The firm's 2026 EPS estimate stands at $316 versus FactSet's $356, and for 2027, $358 versus $404. Franklin Templeton's teams favor broad U.S. exposure across large-, mid-, and small-cap stocks, expecting both growth and value styles to deliver positive returns. Sector-wise, technology, industrials, and energy are seen as likely outperformers, with a preference for free cash flow yield, return on invested capital, and return on equity. The survey also expresses a bullish view on emerging markets and Japan, while citing geopolitics, Fed policy missteps, and earnings disappointments as primary risks.
In fixed income, the survey expects the Fed to remain on hold for most of the second half of 2026, with the fed funds rate ending the year at 3.50%, below the market-implied 4.00% and the FOMC's 3.75% midpoint as of July 31. U.S. investment-grade spreads are projected to widen modestly from 78 to 85 basis points, still well inside the 10-year average of 111. High-yield spreads are seen rising from 279 to 325 basis points, versus a 10-year average of 374, while default rates are expected to dip to 2.5% from 2.8%. Emerging market debt spreads are forecast to widen to 225 basis points from 167, compared with a 10-year average of 291.
Municipal bonds are highlighted as a high-quality diversifier, with projected total returns of about 3.75% for 2026. The survey also sees 30-year conforming fixed-rate mortgages falling from 6.7% to roughly 6.25% by year-end. The 10-year Treasury yield is expected to end at 4.25%–4.50%, below the market-implied 4.85%, while the 2-year yield is seen at 4.25%, down from 4.28%.
In private markets, the survey is particularly constructive on private equity secondaries, citing attractive fundamentals and structural advantages. Institutions are expected to continue seeking liquidity as distributions remain below historical levels. Secondaries managers are buying seasoned assets, shortening the J-curve, and returning capital faster, while offering diversification across vintage, GP, geography, industry, and stage. Real estate valuations have fallen from 2021 peaks, often below replacement costs, with opportunities in multi-family, industrial manufacturing, senior living, and necessity retail. Infrastructure is seen as an emerging opportunity, with digital infrastructure, decarbonization, deglobalization, and demographics as key themes.
The survey's outlook aligns with broader trends in advisor sentiment, as seen in client optimism rebounding despite inflation pressures. However, the firm's above-consensus growth view contrasts with concerns about workers delaying retirement due to inflation. Franklin Templeton's stance also echoes its earlier equity overweight as global EPS forecasts top 20%.
