A structural shift is transforming the global economic landscape. Protectionist measures, strategic industrial adjustments, and a renewed focus on fiscal strength are beginning to challenge the long-held beliefs of four decades of investment practice. The design of long-term portfolios must adapt, not as a quick fix, but as a permanent framework for resilience in an era of significant imbalance.
The global economy no longer operates within a unipolar framework of dollar stability and synchronized growth. Instead, we are entering a fragmented regime where supply chains are reshaped by geopolitical factors, fiscal expansion is no longer limited by market discipline, and inflationary pressures manifest not through overheating but through structural shortages. Capital cannot rely on outdated models of diversification or mean reversion.
The Deficit-Country Equity Rule
Our Q3 2025 Investment Policy Addendum formalizes our approach through what we call the Deficit-Country Equity (DCE) Rule. This framework recognizes that persistent current-account deficits, combined with currency dilution and weak fiscal discipline, create vulnerabilities that traditional benchmarks cannot neutralize. Under the DCE Rule, equity exposure to these jurisdictions is limited to a low-to-mid-teens percentage of total portfolio NAV. Any issuer within this category must demonstrate pricing power, strong supply-chain localization, non-USD revenue dominance, and CPI or FX-linked revenue mechanisms.
This is not a market call. It is a strategic stance designed to reduce exposure to fiscal policy errors, monetary repression, and declining external balances.
Where We Are Attracted
We find ourselves increasingly attracted to sovereign systems where capital is disciplined, external accounts are positive, and domestic industry remains linked to real assets. Nordic economies, Switzerland, the Gulf Cooperation Council, and selected Asia-Pacific nations satisfy these criteria. Within asset classes, we are shifting toward midstream energy infrastructure with stable tolling economics, industrial metals essential for electrification and defense cycles, and CPI-indexed infrastructure assets under regulated concession models.
Our cash flow preference is now clearly defined. We look for assets with short cash-flow durations, high operating leverage against inflation, and minimal refinancing risk. We hold physical bullion not as a tactical hedge but as a lasting reserve of purchasing power kept outside the fiat system. We position not for headlines, but for history.