For decades, markets were able to look through politics. Now, that separation is breaking down. Governments are intervening more aggressively in energy, technology, and defence. Global supply chains are being reshaped by policy, not price. Trade is becoming a tool of strategy, not just efficiency.
Traditional models of diversification are also under pressure. The negative correlation between bonds and equities can no longer be relied on. Defensive assets are not behaving as they once did. This matters because it undermines the core structure of most portfolios.
The race for dominance in artificial intelligence, semiconductors and data infrastructure is influencing government spending, regulation, and global alliances.
If the old rules no longer apply, the way investors manage risk must evolve. That means looking beyond historical correlations and static models. It means building portfolios that can handle political shocks, policy shifts, and unexpected inflation. Liquidity, flexibility and genuine diversification are becoming more important than ever.
Ruffer Investment Company Limited (LON:RICA) is a British investment company dedicated to investments in internationally listed or quoted equities or equity related securities
