Edited by Korea IT Times
Recent cross-asset moves are sending mixed signals, with equities choppy, long-dated government bonds rising, and cryptocurrencies under pressure. Against that backdrop, deVere Group Investment Director James Green argues that simply holding a range of asset classes is no longer sufficient, and that investors should reassess how their portfolios are diversified.
Over the past five trading days, US equities moved modestly higher overall, with the S&P 500 up about 1% for the week despite increased volatility across sectors. Green said market leadership appeared narrow and that large technology stocks showed renewed instability.
In fixed income, longer-term US Treasuries rallied. The iShares 20+ Year Treasury Bond ETF rose more than 2% over the week as yields eased, with the 10-year yield moving back toward the 4.1% level.
Cryptocurrency markets moved in the opposite direction. Bitcoin fell by roughly 9% over the same period, dropping from the low-$70,000 range to the mid-$60,000s, a move Green described as consistent with the asset’s sensitivity to liquidity conditions and investor positioning.
Precious metals added to the uneven picture. Gold, after an earlier rise this year, pulled back more than 7% from recent highs before stabilizing. Silver experienced larger percentage swings during the correction and then partially recovered, reflecting its role as both an investment asset and an industrial metal, as well as relatively thinner liquidity.
Green said these divergent moves can create the impression that diversification is working because different assets are moving in different directions. However, he argued that diversification by category—such as equities, bonds, gold, and crypto—does not necessarily translate into diversification by underlying risk.
He said portfolios can remain effectively concentrated even when they appear broadly allocated. Equity funds may share exposure to the same group of large-cap growth stocks, while bond allocations can be dominated by duration risk. Gold and silver may respond to similar macro variables, such as real interest rates and US dollar moves, and cryptocurrencies often track shifts in liquidity conditions and the regulatory environment.
Green also cautioned that correlations can change quickly when market conditions shift. Assets that previously offset one another may begin to move together, while others may experience sharp swings driven by positioning. In that context, a portfolio that appears balanced may still deliver unexpected volatility.
The rise in long-dated bonds alongside uneven equity performance provided some support to portfolios in the past week, but Green noted that duration sensitivity remains high at current yield levels. In longer-duration holdings, relatively small changes in yields can translate into meaningful price moves.
He added that precious metals have not behaved as straightforward defensive hedges. Gold’s pullback after a strong run higher illustrates how profit-taking and positioning can override safe-haven narratives. Silver’s sharper drawdowns highlight the risk of treating all precious metals as providing the same kind of protection.
Green said investors should evaluate allocations based on the specific risks each asset is intended to address—such as inflation, growth slowdowns, currency weakness, or liquidity stress—rather than relying only on broad asset labels. He argued that exposures such as growth sensitivity, inflation risk, duration, currency exposure, and liquidity dependence are often more important in determining outcomes than the asset class itself.
He maintained that diversification remains important, but said investors should focus on spreading exposure across distinct risk drivers to reduce vulnerability to shifts in macro conditions and correlation patterns.
