Last week, our economists and strategists, Valentin and Marie, shared our positioning and views on the global situation following a hectic first six weeks of 2026 on both the geopolitical and market fronts.
I would like to continue the discussion on the importance of diversification in this environment. To be clear, despite the noise, we believe we are currently supported by solid investment pillars. Growth, inflation, monetary and fiscal policies all provide a strong tailwind for the year ahead.
Nonetheless, we want to prepare our clients’ portfolios for rough waters. We are in a period of major structural shifts across the economy, geopolitics, and technology. In this context—and with the US midterm elections approaching—we expect the heavy news flow to continue. We must remain mindful of our actual capacity to avoid all the pitfalls 2026 may have in store.
By 'being ready,' we mean having the capacity to absorb market shocks without giving in to behavioral biases that jeopardize long-term objectives. Investment discipline is more important than ever. Avoiding excessive exposure to the wrong positions is Risk Management 101. A resilient portfolio prevents poor decisions dictated by fear or a false sense of control.
This involves discussing asset allocation with your advisor. While allocation must always be personalized, there are many levers available to achieve your goals.
Equities remain the primary growth engine for most portfolios, with US tech stocks doing the heavy lifting over recent years. Today, their share of global indices and private portfolios—whether by design or passivity—is dominant. We believe it is crucial to diversify correctly within equity markets into areas where expectations are lower and performance drivers differ.
Consider under-owned segments, such as European small and mid-cap companies. These offer a different narrative while potentially benefiting from the productivity promises of the AI boom. Segments of emerging markets equities also offer interesting combination of growth potential and decent valuations.
Outside of equities, the diversifying potential of government bonds remains a point of debate. Their negative correlation with equities has weakened, carry is limited, and mounting global debt makes the 'safe haven' case less obvious. Consequently, we are rely less on fixed income to be the sole shock absorber..
Finally, we favor uncorrelated hedge fund strategies, real estate and gold as diversifiers. In the private assets space, infrastructure—at the heart of public policy—also deserves a place in private portfolios.
