2025 was a paradoxical year for investors, defined on one hand by a flight to safe-haven assets like gold, and on the other by investors pouring cash into a buoyant equity market.

Depending on your perspective, this may not be so paradoxical after all. While the S&P 500 saw strong gains, returns are unusually concentrated among the ‘Magnificent 7’ group of tech stocks, with investors ‘dramatically overexposed’ to AI plays. Irrational exuberance may strengthen, not undermine, the case for hedging.

Conversely, an optimist might view gold’s seemingly inexorable rise as simply another asset delivering stellar performance.

We’re not about to make predictions for 2026, although risk and fragmentation increasingly feel like the rule rather than the exception. As our ordinary conceptions of what normal times (and normal assets) shift, maybe we should think more broadly about what diversification really means. As we reconsider old orthodoxies, the need for flexible multi-asset strategies can help investors stay agile and make informed decisions in markets where certainty is scarce and fragmentation is structural.

Tectonic shifts

Where are we so far? Well, 2026 has hardly given us a chance to catch our breath.  In the first two weeks of the year, the President of Venezuela was seized by US forces, the White House has mooted taking over Greenland, and the Chairman of the Federal Reserve has been placed under federal investigation.

Meanwhile, Goldman Sachs predicts an S&P 500 rally in 2026.

How do we make sense of so many apparently conflicting signals?

There are really two terrains of interest. First, the structural: significant geopolitical and political-economic shifts that have plausibly already taken place and now shape the backdrop of risk analysis and investment decisions. Second, the tactical: how we think about hedging, asset selection, and concentration risk. Do we risk putting all our eggs in one golden basket?

Structurally, we can leave open the question of whether the so-called ‘Donroe Doctrine’ truly heralds a new era of ‘sphere of influence’ politics. At a minimum, a turn toward US isolationism is likely to accelerate the gradual decentring of the dollar at the core of the global economy.

As former IMF Chief Economist Gita Gopinath persuasively argued, large structural shifts are not always immediately obvious: “While nothing catastrophic happens overnight, Europeans are trying quietly and gradually to decouple from US financial infrastructure, as they question their reliance on Visa and Mastercard. Just a year ago this would have been unthinkable.”

Strength in diversity

Then there’s the question of smart asset allocation. Observers aren’t just bullish on equities. Many experts expect strong demand to keep gold prices elevated in 2026. Yet the bigger question may be concentration risk. In an era of crowded trades in tech, gold, and crypto, genuine diversification could matter more than the illusion of finding a perfect hedge.

As Finalto UK CEO Paul Groves suggested, the 2025 was a volatile year with too much focus on one asset: gold. “This concentration creates risk, highlighting the importance of diversification and a broader strategic approach.”

However, uncertainty needn’t force us on the backfoot. As Groves elaborated, “these conditions also create opportunity. Finalto’s focus will remain on resilience, innovation, and diversification, delivering reliable liquidity, expanding our product offering, and continuously enhancing the client experience. By helping clients manage risk and access a broader range of asset classes, we aim to support sustainable growth and long-term success, regardless of market conditions.”

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Finalto’s global network gives clients access to deep liquidity and seamless execution across multiple asset classes. Our technology, expertise, and relationships enable us to deliver a truly multi-asset trading experience with consistently tight spreads.

Want to deepen your portfolio and offer clients enhanced value? Get in touch with Finalto to learn more about our award-winning liquidity, risk and technology offering.