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Rising policy and political risk: implications for asset allocation

Using a multi-time horizon framework in an era of secular regime change

By: Dirk Hofschire Lisa Emsbo-Mattingly

Updated: 6/3/2021

Key Takeaways

We believe the longstanding global regime of relatively stable and investment-friendly policies, politics, and regulation is nearing an end.
Rising populism, geopolitical de-stabilization, and deglobalization pressures are driving the change.
We expect greater government intervention in the economy to threaten familiar investment-related structures such as relatively undistorted market signals and rules-based global commerce.
To separate headline noise from longer-lasting trends, we have enhanced our multi-time horizon framework to better inform asset allocation decision making.
From the standpoint of strategic asset allocation, we believe higher political risk argues for increased portfolio diversification—including greater geographic diversity and exposure to inflation-resistant assets—to help guard against a wider array of potential outcomes.

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Rising policy and political risk: Implications for asset allocation

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