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Gold
The precious metal has been the standout performer of 2025 so far. Purchases of exchange-traded funds (ETFs) have rebounded, alongside ongoing central bank demand. This has propelled gold ahead of the euro as the world’s second largest reserve asset after the dollar, according to the European Central Bank. Although gold has pulled back from record highs amid optimism that the worst of the trade war is over, we remain constructive on bullion’s long-term value. We expect gold prices to remain supported by declining real interest rates, a weaker US dollar, elevated geopolitical risk premia, and a structural shift in institutional buying. For example, central banks have accumulated over 1,000 tonnes of gold in each of the past three years—more than double the average annual pace of the previous decade, according to World Gold Council data.

Alternatives including hedge funds
With elevated geopolitical tensions, shifting US tariff policies, economic risks, and high equity market valuations, adding alternative assets including hedge funds as diversifiers may make sense. Hedge funds’ ability to go long and short, adjust exposures dynamically, and target specific dislocations—rather than purely chase market directionality or beta—positions them well for current conditions, in our view. If policy shocks and cross-asset volatility persist, hedge funds should continue to benefit from a rich environment for active management and alpha generation. Strategies such as global macro, low-net equity long/short, and multi-strategy funds can further enhance resilience and improve risk-adjusted returns. Investors should be aware of the various risks and drawbacks when investing in alternatives, including illiquidity, limited transparency, and the use of leverage.