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Video: CIO's Ulrike Hoffmann-Burchardi on investing in TRIOs (11:26)

Podcast: CIO's Dominic Schnider on the Fed, Asia FX, and more (12:30)

Podcast: Jump Start 鈥� More global rate cuts, US CPI, and political tumult (4:48)

Syrian President Bashar al-Assad鈥檚 government has fallen after a speedy territorial advance by opposition groups over the past several days, with Assad fleeing to Moscow. The shift in Syrian leadership capped off a week dominated by political surprises and geopolitical uncertainties.

Over the weekend, militia group Hayat Tahrir al-Sham (HTS) entered Damascus, with other areas of Syria captured by different rebel groups, complicating an already fraught situation in the Middle East. Separately, in South Korea, President Yoon Suk Yeol managed to avoid impeachment by just a handful of votes, but he still faces pressure to step down after a thwarted declaration of martial law. In France, President Emmanuel Macron remains in search of a new prime minister to resolve the government budget for 2025.

Global financial markets have been relatively calm, with the MSCI All Country World and the S&P 500 indexes sitting at all-time highs and Asian shares down just marginally. We have highlighted that fundamentals have been the main market drivers, with the strength of the US economy, the global rate-cutting cycle, and AI advancement likely to sustain the equity rally.

But after a period of persistent stock market gains, the risk of a correction remains, especially if geopolitical conflicts start to affect major oil supply routes, US economic data disappoints, or if US President-elect Donald Trump鈥檚 policy sequencing and priorities turn out to be more negative for growth and inflation than investors鈥� expectations. While we continue to hold a positive outlook for risk assets in the year ahead, we see ways investors can bolster the resilience of their portfolios.

Hold exposure to gold as a hedge. Gold prices have consolidated in the range of USD 2,600-2,700/oz in recent weeks, but we continue to see higher prices ahead. The latest International Monetary Fund data suggests global central banks鈥� gold purchases in October rose to the highest level this year, while China returned to the market in November after a six-month hiatus. We anticipate central banks will continue accumulating gold, which should also see support from lower US rates and recovering exchange-traded fund demand amid greater geopolitical uncertainty.

Utilize structured strategies to navigate potential volatility. Structured strategies offer a defensive way to stay invested, allowing investors to retain exposure to further potential gains in stocks while reducing sensitivity to a correction. For example, an investor looking to shield a portfolio from short-term fluctuations in value can pursue a strategy with capital preservation features that locks in gains now or limits the magnitude of a potential loss. Structured notes are another alternative that can preserve existing gains in return for a willingness to forego future growth for some period, subject to awareness and management of the instrument鈥檚 unique risks.

Consider allocations to hedge funds for uncorrelated returns. We believe hedge funds are well positioned to navigate periods of potential volatility, as strategies like equity market neutral, global macro, and multi-strategy platforms could take advantage of market inefficiencies and macroeconomic shifts to generate alpha. With their strict risk limits, hedge funds鈥� historically low correlation with equities and bonds can also provide stability when markets are under stress.

Investors should, however, be aware of the unique risks involved in alternative investments, including illiquidity, leverage, and complexity.