Geopolitical risk and structural inflation are fundamentally altering the investment landscape, rendering traditional 60-40 portfolios increasingly vulnerable. Bonds no longer function as reliable safe havens, as they often co-move with equities during inflationary shocks, forcing a re-evaluation of risk mitigation strategies. Trend following provides a robust, rules-based alternative, yet its effectiveness depends on capturing episodic, high-impact market events rather than consistent performance. Research indicates that investor return-chasing and short-term timing often erode the benefits of these strategies, particularly in public liquid funds. To navigate this environment, investors must move beyond legacy biases, treating trend following as a necessary second responder to market chaos. By adopting a total portfolio approach and maintaining long-term discipline, investors can better withstand the volatility driven by energy demands, geopolitical tensions, and ongoing AI-driven market shifts.
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