There is a growing sense that the foundations of portfolio diversification are shifting in ways that investors can no longer ignore. Jasmine Yeo, an investment manager at Ruffer, argues that while diversification remains essential, its most trusted components are not behaving as they once did. In particular, the assumption that government bonds or the US dollar will reliably offset equity risk has come under pressure, especially in moments of broader market stress.
In recent years, periods of market turbulence have exposed correlations that previously appeared negative but are now proving less stable. When both equities and bonds fall in tandem, the classic 60/40 allocation offers little shelter. This has raised questions about whether traditional safe havens still serve the function investors expect. Rather than relying on a fixed toolkit, Yeo advocates for a more flexible approach, one that draws on a broader set of assets capable of performing in unfamiliar or adverse conditions.
Commodities have come back into focus, not just as an inflation hedge but as a structural diversifier in an environment where geopolitical risk and resource constraints could become more influential. Alternative strategies are also gaining relevance. These are not simply risk-off tools, but sources of uncorrelated return that can enhance portfolio resilience when markets behave unpredictably.
Ruffer Investment Company Limited (LON:RICA) is a British investment company dedicated to investments in internationally listed or quoted equities or equity related securities
