# Geopolitical Tensions Force Investors to Change Strategy

Geopolitical tensions and high inflation are forcing investors to shift toward new investment strategies. According to an analysis by the Wall Street Journal, government bonds no longer protect investors from losses during crises as effectively as they once did.

Ongoing conflicts in the Middle East, tensions between the US and China, Russia's war in Ukraine, and extreme weather continuously increase the risk of rising prices. Unlike previous crises, such events have negative impacts simultaneously on both equities and bonds. As a result, diversifying a portfolio across different assets can no longer always reduce the risk of losses.

Some funds are taking a different approach. For example, Australia's $240 billion Future Fund is increasing its equity investments. According to the fund's assessment, allocating more capital to equities amid geopolitical uncertainty increases the potential for better returns.

Investors are also turning to gold and hedge funds, though gold has not always proven to be a reliable choice during recent periods of conflict. In the case of bonds, experts increasingly favor inflation-linked and short-term securities.

It should be noted that investors often only realize the real impact of geopolitical threats after the situation escalates. In the future, they will need to prepare for more frequent market fluctuations and higher yields on bonds.

Source: Investing.com