What must be possessed in a fragmented world

2025 So far it is a year of uncertainty, with the development of US political triggering large -magnitude volatility throughout the equity market, making investors with puzzles in the most appropriate path forward.

“Diversification functions as an antidote to uncertainty,” wrote the AHL Portfolio Manager and Strategy Expert, led by the Head of Global Management of the Tarek Abou Zeid client portfolio.

“Although we cannot predict which markets will outperform, maintaining broad exposure in all regions and asset classes function to manage risk in fragmented market conditions.”

Historically, it may seem wise to be allocated to the global equity index to regional diversification, such as the world index of all MSCI countries.

But the US forms almost two-thirds of the index, given the higher performance for several years and recent performance than the seven stocks of Apple, Amazon, Alphabet, Nvidia, Microsoft, Meta and Tesla.

“Laziness against the US in a market -based index means that this diversification is not as strong as people think,” said MAN AHL.

“This makes investors especially exposed to the performance of US shares, which can be a risk if the US continues to adopt what is considered a market as a policy that is less friendly.”

Conversely, the company says that building a portfolio that allocates based on maximum diversification (see chart below) reduces this by balancing risks in various regions, which leads to performance that is tailored to a better long -term risk.
Source: Reuters