hedge funds: the move away from portfolios built for globalisation

the impermanence of policy clouds the short term.

The current investment landscape is difficult to navigate because many of the recent US trade policies don’t give a sense of permanence. As such, key tariff decisions are postponed by the administration and the consequences apply from the company level up to macro themes.

In the short term, there is therefore a dichotomy between technicals and fundamentals, meaning many fundamentally driven strategies will somewhat suffer in the near future. Instead, this is a market set for ultra-high-frequency trading models, in our view, and the days ahead could feature a lack of visibility.

paradigm shifts away from globalisation.

That being said, clear trends are emerging that look set to remain in place, some of which represent significant paradigm shifts. For instance, we are moving away from a world of monetary dominance to a world of fiscal dominance. Globalisation will reverse. The trend is not for markets to become more free but rather about the posterisation – or greater differentiation – of industrial policies in many regions and sectors.

This has profound implications for portfolios that have been built to benefit from globalisation: in effect, they will need to adapt. It is doubtful, for instance, that 70% of the world’s savings will continue to flow to the US.

Real assets, more balanced allocations and disciplined and flexible strategies such as hedge funds – provided they return above a risk-free rate that is likely to remain elevated – should benefit from these shifts, in our view.

read another asset class view

after the bell.

What do you think should be keeping other investors up at night?

Having a portfolio that is built for the status quo and based on historic return patterns should keep other investors up at night, in contrast with those whose portfolio looks to embrace change and is able to adapt.

author.

Christophe Khaw
CIO, 1798 Platform

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This document is a Corporate Communication for Professional Investors only and is not a marketing communication related to a fund, an investment product or investment services in your country. This document is not intended to provide investment, tax, accounting, professional or legal advice.
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