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Thought of the day

Risk sentiment softened on Tuesday amid uncertainty about the state of US-Iran peace talks, while fighting between Russia and Ukraine continued. Futures contracts on the S&P 500 index were pointing 0.1% lower ahead of the US market open.

While resilient economic and earnings fundamentals have pushed global stocks to all-time highs, continued geopolitical uncertainty remains a key investor concern and source of market volatility. In fact, major geopolitical conflict is identified by global family offices as the top concern across both short- and long-term horizons.

According to the 麻豆社 Global Family Office Report 2026, which draws on insights from 307 family offices in more than 30 markets with an average net worth of USD 2.7bn, rising global debt levels and the risk of global recession are also top of mind in the next five years. Taken together, these concerns point to preparation not just for near-term volatility, but for an extended period of elevated and interconnected risk.

Indeed, the report reveals a shift toward building resilience for a wider range of potential outcomes, as concern about uncertainty is accompanied by efforts to reduce portfolio concentration. In our view, this reinforces the role of diversification as a risk management tool.

A growing share of family offices are planning to change their strategic asset allocations. Strategic asset allocation has traditionally been one of the most stable elements of family office portfolio construction, with changes unfolding only gradually over time. Against the current backdrop of macroeconomic uncertainty, however, family offices are reconsidering their long-term positioning. According to the report, 60% of family offices indicate that they are planning changes to their asset allocation over the next 12 months, significantly higher than the 35% seen last year. The survey suggests the planned changes generally involve a slight tilt toward emerging market equities, alongside higher allocations to gold and select alternatives such as infrastructure.

Geographical shifts are used to reduce concentration risk. North America continues to represent the largest share of global family office portfolios and accounted for 53% of portfolio allocations in 2025. While this central position has not been abandoned, many family offices indicate that they are planning to diversify regional exposure over the coming years. More specifically, interest is growing in Asia Pacific, including Greater China, alongside Western Europe, as destinations for increased investments.

Exposure to the US dollar is being reassessed amid debt concerns and geopolitical influence. While regional diversification addresses one dimension of concentration, currency diversification offers another way to manage the risk. In fact, close to 50% of the family offices in the survey describe themselves as over-exposed to the US dollar, and nearly 30% said they have already reduced or intend to reduce exposure to USD-denominated assets as part of their currency risk management. Around a fifth of family offices hold or are considering cash and near-cash assets across multiple currencies, while currency hedging strategies such as forwards, options, and swaps are also used in parallel to manage currency exposure.

So, while we maintain a positive outlook on risk assets such as global equities, the report underlines how diversification across asset classes, regions, and currencies remains key to navigate continued geopolitical and economic uncertainty.