Investing for a new direction: the new map of capital

“Life can only be understood backwards; but it must be lived forwards.”

Danish philosopher Søren Kierkegaard's observation neatly captures the investor’s paradox. Allocating capital today means making predictions about an uncertain future. Navigating this uncertainty requires analysing the dynamics of an evolving world order, and adhering to some core investment principles.

The last five years have delivered a series of shocks for investors: Covid-19, an inflationary resurgence and rate-hiking cycle, the Ukraine war and energy crisis, rising tariffs and shifting geopolitical alliances. Yet the AI revolution has proved a powerful tailwind for earnings, and the S&P 500’s total annual returns of around 15% on average from 2020-2025 have been well above average returns of just below 10% seen over the past century¹.² The first half of 2026 has also seen global equities gain ground despite oil market disruptions and conflict in the Middle East.

An investor contemplating these shocks, and a more volatile geopolitical backdrop, might not have foreseen such strong years for equities. Faced with uncertainty, an investor’s natural instinct is to try and remove risk. But such knee-jerk reactions can prove damaging.

This is partly because timing the market is a difficult exercise. In a fast-moving news cycle, risks are quickly discounted in prices. And if the anticipated risk materialises and proves less disruptive than feared, markets can counterintuitively rise. The most attractive buying opportunities can therefore be the hardest to act upon.

Equity market corrections are also less frequent than many people assume. Since 1945, the S&P 500 index has seen 24 corrections of 15% or more, while the US economy has experienced only 13 recessions ³. And since 1990, the S&P 500 has experienced an intra-year correction of at least 10% only about one year in every two. A flight to haven assets as a reaction to uncertainty can therefore penalise returns.

Crucially, geopolitical shocks do not necessarily translate into market shocks. Their impact, duration, and scope can of course be hard to quantify and to price. But since the 1990s, market reactions to such shocks have become more muted, partly as advanced economies have become less energy-intensive and policy frameworks have built in greater resilience.

Fundamentally, if companies can keep making profits, equity market reactions to geopolitical shocks will likely be muted. Investors must therefore assess whether such developments actually threaten key economic channels such as supply chains, energy, and commodity markets. Recent examples include new trade barriers, restrictions on technologies, raw materials, and the closure of physical chokepoints.

Over time, too, even these impacts can lessen as markets find workarounds. Since its invasion of Ukraine in 2022, Russia has lost its stranglehold over European natural gas markets. Trade flows are readjusting to work around tariff barriers – the global trade in goods and commercial services reached a record USD 35 trillion in 2025, according to the World Trade Organization (WTO). And Iran’s weaponisation of the Strait of Hormuz is hastening other countries’ incentives to find alternative routes.

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Trading differently, not less: when resilience beats efficiency

October 9, 2026

Nor does a more competitive world translate into a weaker investment backdrop. Indeed, from food, water, energy, and health to cyber and homeland security, the need for countries to secure strategic resources is reshaping value chains and creating new investment opportunities. The desire for economic security is driving a new capital spending cycle that has expanded far beyond AI. It is generating demand, supporting manufacturing activity and corporate profits, and proving a powerful tailwind for the global economy and equity markets.

Of course, investors should not be complacent about geopolitical events. Rather, we believe that they demand a disciplined and critical framework with which to evaluate them. In an evolving world order, geopolitics is reshaping long-term capital flows, but it also remains a potent source of portfolio risk. Therefore, we seek to build portfolios that can endure such shocks through a robust strategic asset allocation.

Fundamentally, if companies can keep making profits, equity market reactions to geopolitical shocks will likely be muted

A portfolio’s strategic asset allocation is its foundation, a crucial base that generates the bulk of its returns over time. A strategic asset allocation blends imperfectly correlated assets to improve risk-adjusted outcomes through discipline, structure, and periodic rebalancing based on expected asset class evolutions. The objective is not to outperform markets but to keep investors aligned with their chosen level of risk, and the realities of a new world order. Around this steady anchor, tactical asset allocation plays a valuable role; not as an attempt to predict every market turning point, but to allow investors to respond in an informed way when circumstances change.

The most enduring source of conviction is therefore not prediction, but process: a robust framework that can withstand uncertainty, adapt to change, and remain focussed on long-term objectives. This helps an investor embrace new sources of opportunity while accepting a fundamental truth: the future cannot be known, only navigated.