From Crowded Trades to Real Assets - A Shifting Market Regime
The result is what we are calling the 'Great Rotation' — a gradual but accelerating move away from overvalued technology and speculative growth stocks towards real assets, precious metals, commodities, emerging markets and structurally advantaged sectors. This shift is not a tactical trade, but rather a recognition that economics is being turned on its head and the investment regime is fundamentally changing.
Why the Old Playbook is Breaking Down
Traditional equity-bond mixes have long relied on bonds as a diversifier when equities fall. But in a world where inflation remains sticky and debt levels high, bonds themselves lose value in real terms and offer limited protection. Equities, meanwhile, are under pressure from high valuations generally, challenged business models and weaker earnings growth. Together, these dynamics erode the defensive qualities of the indexed 60/40 model that has dominated asset allocation for decades.
At the same time, the concentration of market performance in a narrow set of mega-cap technology stocks has left portfolios vulnerable to valuation risk. As discount rates rise and growth and cashflows disappoint high growth expectations, the justification for extreme multiples in these sectors becomes more fragile. The rotation is already underway as investors seek better alternatives and protection elsewhere.
The Case for Real Assets and Commodities
Real assets are increasingly being recognised as essential components of resilient portfolios.
Precious metals such as gold and silver act as hedges against both inflation and policy uncertainty, with demand supported by central bank buying and supply constraints. Industrial commodities — uranium, copper, and other critical materials — benefit from structural underinvestment in supply alongside accelerating demand from energy transition, electrification, and defence.
Unlike crowded equity trades, these assets are not priced for perfection but in some cases are generationally cheap. They offer tangible links to the real economy, scarcity value, and protection against the erosion of purchasing power.
In a stagflationary environment, they are among the few exposures that can both defend capital and generate attractive returns.
Geopolitics and Policy Fragmentation
Geopolitical fragmentation is reinforcing this shift. Supply chain realignment, energy security, and fiscal dominance are reshaping global capital flows. Policy responses differ across regions, with more and more central banks tolerating higher inflation to support growth while attempting to avoid recession. This introduces great risks from currency and sovereign bond debasement and changing international capital flows, while simultaneously accelerating the move towards assets tied to tangible value and long-term necessity. The opportunity is obvious and historic for those prepared to adapt portfolios to the changing capital flows.
Defence spending, energy transition projects, and infrastructure build-outs are driving sustained demand for industries and commodities that had been neglected for years. Investors are beginning to recognise that these areas, once considered 'old economy,' are in fact central to the new investment paradigm and for inflation protection.
The Role of Stagflation
The likelihood of stagflation — elevated inflation alongside stagnant growth — is one of the most powerful catalysts for the Great Rotation. History shows that stagflationary regimes undermine both bonds and equities, leaving investors with limited traditional defences. Real assets, by contrast, have historically outperformed in such environments, offering both protection and upside.
This is not simply about hedging risk. It is about aligning portfolios with the structural drivers of the coming decade to produce returns and respond to resource scarcity, geopolitical competition, and the reconfiguration of global supply chains. These themes are durable and provide long-term tailwinds for commodities, essential infrastructure, and alternative assets.
A Structural Shift, Not a Trade
What makes the Great Rotation different from past cycles is its structural nature. Investors are not simply needing to rotate cyclically to chase short-term momentum but need to structurally realign their entire portfolio approach. Investors are reassessing the foundations of portfolio construction in light of changing economic realities. The dominance of passive, index-driven strategies that funnel capital into crowded trades is being challenged by the need for flexibility, differentiation, and outcome-oriented investing.
Real assets, precious metals, and thematic equities linked to industrials, energy, and defence represent exposures that remain under-owned relative to their importance in this new economic paradigm. For investors willing to move beyond benchmarks, this creates significant opportunities for both diversification and superior long-term performance.
Conclusion: Positioning for the New Regime
The Great Rotation is not about abandoning equities altogether, nor is it about rejecting innovation in technology. Instead, it reflects a recognition that the era of easy money, subdued inflation, and concentrated equity leadership is over. The new environment is defined by inflation persistence, fiscal stress, geopolitical fragmentation, and structural demand for tangible assets.
For investors, the challenge — and the opportunity — lies in adapting to this shift before it’s too late. Portfolios tied to static equity-bond allocations and index-heavy exposures will struggle to deliver real outcomes in a stagflationary regime. By contrast, strategies that embrace diversification through real assets, precious metals, industrial commodities, and differentiated global equities are far better positioned to preserve wealth and capture short-term, medium-term and long-term upside.
Our approach is deliberately aligned with these themes. We hold exposures to assets and sectors that benefit from inflation protection, scarcity value, and structural growth — from precious metals and uranium to energy transition, defence, and industrial infrastructure. Our positions are not crowded or overvalued, they are forward-looking, and they are essential to navigating a new economic regime of stagflation and potential fiscal crises.
The Great Rotation is underway.
By being positioned ahead of it, our portfolios are not only insulated against the risks of stagflation but also stand to benefit from the opportunities it creates.
We actively manage our portfolio to reoptimize them to this new environment to both manage risk and gain additional returns. This is where active, conviction-led investing can truly differentiate outcomes in the years ahead.
It’s already working in 2025 as the world wakes up to the new reality.
