Rethinking Diversification: Bonds, Commodities and Trend in the Current Market Regime

Aspect Capital

Research

10 Pages

Aspect Capital examines whether the investing environment that supported the classic 60/40 portfolio is giving way to a new regime shaped by inflation, deglobalization, and geopolitical instability. The paper argues that commodities and trend-following strategies may play a larger role as stock-bond diversification becomes less reliable. It also highlights how structural shifts, rather than temporary market cycles, are driving today’s investment landscape.

Key Takeaways

Gold demand surges: Central banks bought 1,000+ tonnes of gold annually in 2022 and 2023, reflecting growing reserve diversification.
2022 exposed 60/40: Simultaneous equity and bond losses made 2022 one of the worst periods in decades for traditional balanced portfolios.
Commodity diversification: The strategy highlights commodity exposure across 8 sectors, benefiting from both the 2014–15 collapse and 2021–22 rally in commodity markets.
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