MEETING PURPOSE
Our investment team aim to meet every week to discuss the macro environment and how this could impact our current and future portfolio construction.
KEY TAKEAWAYS
- Commodities Shift: The team views the commodity rally as a structural, geopolitical play for resource security, not a cyclical one. It justifies a higher, more permanent allocation, but a risk management process is critical to manage price volatility. Position sizing also important relative to each portfolio mandate.
- Offshore Fund – Equity Exposure: Portfolios are highly exposed to equities (80%), driven by strong equity and commodity performance. The key risk is a sharp correction, likely triggered by the US election views as the year progresses. Other risks are a probability of an inflation shock – not our short term base case.
- Risk Management Focus: The Offshore fund strategy is to manage risk via liquidity (50% ETF exposure for rapid de-risking) and by targeting a maximum drawdown of 8-10%, using technical indicators (RSI, Stochastics) to trigger tactical moves. Same for local funds – ensure we have a form of protection or ensure an exit strategy if required.
TOPICS
Portfolio Performance and Positioning
- Commodities: The rally is seen as structural, driven by geopolitical competition for resource security.
- Industrial Metals: A broadening bull market is emerging in copper, nickel, and tin, driven by demand for AI and energy infrastructure.
- Precious Metals: Gold and silver show strong bullish technicals. The gold-silver ratio is at a key level, suggesting silver has more room to run.
- Geopolitics: The US midterm elections are potentially the primary market driver for 2026.
- Scenario 1 (Trump Wins): Expect continued fiscal stimulus, a strong Dollar, and a commodity rally.
- Scenario 2 (Trump Loses): Expect a sharp market correction (15%+), a weaker Dollar, and a commodity pullback.
- Valuations: Global markets are no longer cheap. The 10-day rally in 2026 has already captured half of Alpine Macro’s 10-year annualized return forecast, highlighting the risk of a shallow short term correction.
Risk Management Strategy
- The team agreed that the primary risk for portfolios is a sharp bear market (20%+ drawdown), not a minor pullback. Our base case is that there are no signs of a sharp bear market in the short term.
- Liquidity: Most Funds are structured with 30~50% in highly liquid ETFs, enabling rapid de-risking (within an hour) if needed.
- Drawdown Target: The goal is to limit drawdowns to a maximum of 8-10%, protecting the significant gains of 2025.
- Tactical Triggers: Technical indicators (RSI, Stochastics) are used to identify overbought conditions and trigger tactical top-slicing (e.g., selling Resi at 136, re-buying at 131).
The content of this article is for information purposes only and does not constitute an offer or invitation to any person. The opinions expressed are subject to change and are not to be interpreted as investment advice. You should consult an adviser who will be able to provide appropriate advice that is based on your specific needs and circumstances. The information and opinions contained herein have been compiled or arrived at from sources believed to be reliable and given in good faith, but no representation is made as to their accuracy, completeness or correctness.3