Geopolitical uncertainty has become a theme of 2026. Things are changing quickly following the U.S. seizure of Venezuela’s president Nicolas Maduro, turmoil in Iran and continued tariff threats that are driving some trading partners to reach agreements that bypass the U.S.
“Looking ahead to 2026, the geoeconomic outlook is inherently uncertain, but the real risks are the low-probability events with outsized consequences,” says Mina Krishnan, a multi-asset portfolio manager at Schroders. “We evaluate these scenarios through three questions: Will they move markets, can that move be traded and will it last?”
Investors are navigating a new geopolitical reality.
“Washington is showing everyone, markets included, that it will act unilaterally when it sees advantage, and that the post-1945 constraints on great-power behavior no longer hold,” says Adam Irwin, managing partner for strategic insights in the Heligan Group, a financial advisory and insights firm. “That’s what investors need to grasp. Not whether Brent [crude] hits $70 or $60, but whether the rules themselves are changing.”
That reassessment is already influencing how investors define safety. Assets that rely on stable institutions and predictable policy are being scrutinized more closely—for example, real assets and commodities have regained prominence as portfolio hedges against uncertainty, while the perceived safety of safe haven assets like U.S. Treasury bonds has come under scrutiny.
“As an overall viewpoint, there is a great power shift right now,” says Patrick Murphy, executive director for geopolitical advisors at Hilco Global and a former U.S. congressman and undersecretary of the army under former President Barack Obama, who points to the national security strategy document recently released by the administration of President Donald Trump, which calls for the world to be split into spheres of influence—with the U.S. having control over the Western Hemisphere, and Russia and China ruling their respective regions.
“What makes that interesting is that people realize that, geopolitically, it’s no longer background noise. It’s now a core pricing mechanism,” Murphy says. “You look at $3.5 trillion across-border investments that have been reallocated, and so people are trying to de-risk their investments.”
Commodities Rise
Commodities like gold and silver are extending a 2025 rally based on the geopolitical uncertainty and trade-related concerns, as well as a weakening dollar—making commodities a useful hedge. The two metals have returned 17% and 40%, respectively, year to date.
“Heightened concern over fiscal deficits has further reinforced gold’s role as a portfolio diversifier during periods of uncertainty,” says Dawid Heyl, a natural resources portfolio manager at asset manager Ninety One. “Ultimately, a move away from the dollar—which has been the ultimate safe haven asset for generations—into relatively smaller markets such as gold and other precious metals is exacerbating these moves. …. Broadly speaking, ongoing global uncertainty has increased the appeal of real assets, supporting prices across precious metals.”
Demand for gold is accelerating as 80 years of international-rules based order is changing, Krishnan says, but soaring prices may not last forever—this was evident by the January 30 sell-off in commodities.
“The risk is gold suffering from the same issue that has plagued equities and bonds for years: rich valuations,” Krishnan says. “This argues for greater selectivity across the investment landscape, whether it be broader metals, value equities or international currencies.”
Trending Away From U.S. Assets
Trump’s threat to annex Greenland did not land well with European governments or institutional investors. Asset owners there collectively manage trillions in assets from the U.S. Several European pension funds in recent weeks made clear they plan to or have already dumped their holdings of U.S. Treasury bonds due to Trump’s unpredictability and concerns over the fiscal conditions of the U.S.
AkademikerPension, the Danish pension fund for academics, sold its $100 million in Treasury holdings. While that may be a small amount, CIO Anders Schelde said in a statement the sale was driven by concerns over the long-term sustainability of U.S. government finances.
Schelde had told CIO, before the announced Treasury sale, that a full divestment from all U.S.-based assets would be disproportionate and that his fund would likely retain its investments in private U.S. companies, even under a scenario in which Greenland was annexed.
Investors in the U.S. are also looking to diversify outside the U.S., mitigating concentration risk as the valuations of U.S. assets continue to rise.
“U.S. investors still prefer their home market overall but are increasingly mitigating its concentration and valuation risks with overseas exposure,” says Elias Erickson, an international franchise portfolio manager at Ninety One. “Pressure on the [dollar], exacerbated by elevated geopolitical uncertainty, adds to this interest. Efforts to diversify are so far selective and incremental but picking up speed.”
A report from Macquarie Asset Management noted that “A lesson from Trump 1.0 is that roughly nine months after the increase in tariffs the negative effects on trade and the U.S. goods sector started to be felt. This might imply that the economic impacts from this year’s tariffs could start to exert themselves most forcefully in early 2026.”
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