Alternatives 3Q26 – Finding Shelter

As 60/40 diversification benefits weaken, diversified alternatives can improve overall portfolio resilience

Chief Investment Office30 Jun 2026

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Iran War has driven up energy prices, increasing inflation and gold volatility
Gold's safe haven status depends on Iran War resolution and Strait of Hormuz reopening; a protracted conflict seems likely for now
Gold has been trading as a risk asset recently though we do not believe this shift to be permanent
Long-term outlook for gold remains strong as de-dollarisation and monetary debasement narratives continue to gain momentum
Inflation and tighter policy can make traditional 60/40 portfolios less reliable, because equities and bonds can fall together when diversification is needed most
The CIO diversified alternatives strategy offers single-ticket access to all alternative asset classes, each with uncorrelated return sources to boost portfolio diversification
Hedge funds and gold provide the defensive core, helping reduce drawdowns and preserve portfolio stability during periods of market stress and heightened volatility
Real assets add inflation protection through inflation-linked cash flows, while private credit offers rate hike protection through high floating-rate income
Private equity supports long-term return potential through active value creation, improving exit activity and access to private AI opportunities, though selectivity is required

Figure 1: Back-tested diversified alternatives strategy outperformed 60/40 in key stress periods

Source: Bloomberg, Preqin, DBS

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