By Taosha Wang
Rising leverage, shifts in global alliances, technological disruption and policy uncertainty, underscore the need for resilient portfolios.
While U.S. government bonds and investment-grade credit, exhibit low volatility under normal conditions, their hedging power often falters during inflationary, fiscal or liquidity-driven shocks - as 2022 demonstrated.
Gold's volatility recently rose above 40 which indicates a level higher than most major equity indices. That's largely because gold's over 200% rally since 2022 has attracted significant speculative interest.
MSCI China delivered a 28% return in 2025, versus 16% for the S&P 500, the best performance for the former, in both absolute and relative terms, in years.
Energy was a decent hedge in 2022 because inflation and supply disruption were the key risks. But if we're entering a period of oversupply in certain energy markets, that hedging ability may no longer hold.
Copper could benefit from the AI boom but also serve as a hedge against the tail risks of resource scarcity and disruptive inflation.
Source: Reuters
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