Song Qinghui: Diversified Allocation to Build a More Resilient Investment Portfolio

Internet News Information Service License Number: 51120180008

■ Song Qinghui

Against the backdrop of rising global economic and geopolitical uncertainties, market volatility has significantly increased. In recent years, from inflation pressures to regional conflicts and sharp fluctuations in energy prices, the investment environment has become increasingly complex. For investors, managing risks and maintaining portfolio stability amid these macroeconomic challenges has become a core issue in asset allocation.

As is well known, gold has long played a special role in the global financial system. Unlike stocks, bonds, and other financial assets, gold possesses both commodity and monetary attributes. Historically, during financial crises, inflation cycles, or intensified geopolitical conflicts, gold often demonstrates strong risk resistance. Its price movements tend to have a certain inverse relationship with risk appetite in financial markets. Therefore, allocating a certain proportion of gold in a portfolio can effectively reduce overall volatility.

Currently, the global economy is undergoing multiple structural changes. On one hand, the global energy supply and demand landscape is adjusting, with energy prices continuing to fluctuate under the influence of geopolitical conflicts and supply uncertainties. Rising oil prices tend to benefit energy-related listed companies, especially oil and natural gas producers, whose profitability usually improves during energy price uptrends. On the other hand, global military spending continues to increase, with some countries expanding their defense budgets, supporting long-term demand in the defense industry. In this context, energy and military sectors are increasingly viewed as having certain “defensive attributes.”

From an asset allocation perspective, allocating part of the funds to energy and defense industries can help enhance the portfolio’s resilience during periods of rising geopolitical risks. However, relying solely on sector allocation is insufficient to fully hedge market risks. Uncertainty in financial markets stems not only from macroeconomic cycles but also from policy changes, interest rate fluctuations, and market sentiment. In such circumstances, moderately allocating gold or gold-related financial products becomes a relatively convenient and transparent hedging method. Compared to physical gold, gold ETFs offer advantages such as ease of trading, better liquidity, and lower holding costs, making them suitable for long-term investment by ordinary investors.

It is important to emphasize that gold allocation should follow the principle of moderation. Gold itself does not generate cash flow, and its long-term price trends are more dependent on macroeconomic conditions and market sentiment. An excessively high proportion of gold in a portfolio may impact overall returns. Asset allocation research generally suggests that allocating 5% to 15% of assets to gold or gold-related products can achieve a reasonable balance between risk control and return.

Beyond gold and defensive sector allocation, another key strategy in the current market environment is to appropriately reduce positions in high-valuation technology stocks. Over the past decade, the global tech industry has experienced rapid growth, with some leading companies’ market values soaring and valuations remaining relatively high. When interest rates rise or market risk appetite declines, high-valuation growth stocks tend to be more volatile. Therefore, during periods of increased market uncertainty, reducing exposure to such assets can help mitigate valuation risks in the overall portfolio.

From a longer-term perspective, building a resilient investment portfolio hinges on risk diversification. Relying on a single asset class often makes it difficult to perform well across all market conditions. Diversifying across asset types, industries, and risk profiles can significantly reduce overall portfolio volatility.

In practice, investors should adjust their allocation ratios based on their risk tolerance, investment horizon, and liquidity needs. For those with higher risk tolerance, maintaining core asset stability while moderately increasing weights in energy, defense, and other sectors can enhance return potential. Conversely, more conservative investors may increase allocations to gold and bonds to improve stability.

Additionally, a long-term investment perspective is crucial. Short-term market fluctuations are often driven by emotions and unexpected events, while long-term returns depend more on fundamentals and economic structural changes. Frequent trading can make it difficult to accurately time the market and may increase transaction costs. Establishing a stable portfolio through strategic asset allocation and making moderate adjustments based on macroeconomic conditions is generally more conducive to steady wealth growth than short-term speculation.

In summary, in the current environment of global economic and geopolitical uncertainties, relying on a single investment strategy is insufficient to navigate complex market changes. By allocating defensive assets such as energy and defense sectors, moderately investing in gold or gold ETFs, reducing high-valuation assets, and increasing cash or short-term bonds, investors can enhance portfolio stability to some extent.

Looking ahead, the global financial markets may continue to face numerous challenges—from inflation and interest rate trends to geopolitical shifts. In this context, maintaining rational investment, emphasizing risk management, and diversifying assets to build more resilient portfolios will likely be key strategies for achieving long-term steady returns.

Editor | Wang Wei

Chief Editor | Qing Zixiu

Review | Yuan Gang
Three Reviews | Zhang Jing