Rethinking Hedging and Alternative Assets in 2025

Portfolio Resilience in Transition: Rethinking Hedging, Yield, and Alternative Assets in 2025

🧭 A New Investment Landscape Demands New Rules

For decades, U.S. government bonds and the dollar have been the bedrock of global investment portfolios—widely regarded as reliable hedges against volatility and downturns. But in 2025, the tide is turning. Investors are confronting a reality in which these “safe havens” no longer behave predictably.

Philip Chandler outlines five core risks reshaping asset allocation today:
➡️ Slower economic growth
➡️ Persistent inflation
➡️ Market concentration in mega-cap tech
➡️ Rising political populism
➡️ Long-term fiscal sustainability challenges

Against this backdrop, the traditional 60/40 model is evolving—and so must the assumptions that drive global portfolios.

💵 Bonds: From Hedge to Income Generator

While fixed income still plays a role in diversified portfolios, its function is shifting. Bonds are now primarily held for their yield, not for their historical role as reliable crisis hedges.

Take Hawksmoor, for example. The firm has reduced exposure to U.S. Treasury Inflation-Protected Securities (TIPS) due to doubts about the dollar’s performance in future crises. Instead, the team is tilting toward high-quality corporate bonds and UK gilts, where fiscal governance frameworks are seen as more disciplined than in the U.S.

“Unlike the U.S., the UK maintains more structural checks on public borrowing,” says Daniel Lockyer, noting the recurring U.S. debt ceiling debates as a red flag.

🪙 Gold and Precious Metals: Strategic Defense in Uncertain Times

With traditional hedges faltering, investors are turning to gold and industrial metals. Over the past year, gold has delivered impressive returns—~46% in USD and ~38% in GBP—and remains a core defensive asset.

Peter Walls sees upside ahead, driven by both “fear trades” and industrial demand (e.g., copper) amid the global green energy transition. His funds hold positions in Golden Prospect Precious Metals (GPM) and BlackRock World Mining (BRWM).

At Hawksmoor, exposure to physical gold (via WisdomTree GLDW) and gold miners (Konwave Gold Equity) remains intact. Lockyer admits gold miners are volatile, but views them as a necessary risk given the macro backdrop.

Meanwhile, Chandler recently trimmed gold exposure after a strong run but notes that record central bank buying, especially following the freezing of Russian reserves, continues to underpin gold’s resilience.

🏗️ Alternatives on the Rise: Infrastructure, Real Assets, and Private Markets

As core markets become crowded and traditional safety nets fade, investors are reallocating capital into real assets and private markets—asset classes once considered secondary, now moving center stage.

🔋 Infrastructure & Property Trusts

Renewable energy infrastructure and inflation-linked real assets are regaining appeal. Lockyer sees 12–13% dividend yields as compelling income opportunities, even if asset prices stay depressed. However, he stresses the need for selectivity, especially around dividend sustainability.

Walls echoes this optimism and has recently been added to TR Property Investment Trust (TRY), citing its long-term management strength and consistent performance across cycles.

💼 Private Equity Reimagined

After a cautious period, Neuberger and others are re-entering private equity, positioning for future upside. Karen McMillan emphasizes the opportunity in today’s dislocation:

“Uncertainty breeds opportunity. While legacy capital is under pressure, new capital deployed now could be well-positioned for long-term growth.”

She highlights that more companies are staying private longer, creating an extended investment runway for private capital—particularly in growth-stage firms and secondary market opportunities.

🔄 Conclusion: Adaptability Is the New Hedge

The investment environment of 2025 calls for deeper diversification, greater agility, and a broader definition of portfolio safety. No longer can investors rely solely on Treasuries and the U.S. dollar as their protective shield.

Today's global portfolios are built with:

• Real assets that offer inflation linkage and income
  

• Gold and metals that respond to systemic risk
  

• Private equity that captures innovation early
  

• Carefully chosen fixed income that reflects fiscal prudence

As old certainties fade, resilient portfolios will be those designed with strategic flexibility, macro awareness, and a forward-looking view of risk.

#InvestmentStrategy #AssetAllocation #Gold #PrivateEquity #InfrastructureInvesting #SafeHavenAssets #Bonds #YieldStrategy #Alternatives #PortfolioConstruction

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