Building an all-weather portfolio in 2026

In today’s environment of inflation, geopolitical tensions and frequent shocks, what does an “all-weather” portfolio look like in practice?

An all-weather portfolio relies on a simple idea: we do not know what comes next, in the sense that inflation can return, growth can stall, rates can move the “wrong” way, or politics can suddenly matter. If a portfolio only works in one of those worlds, it is considered to be fragile. So instead of trying to guess the next regime, you hold assets that win for different reasons, for instance equities for long-term growth and innovation, high-quality bonds and cash for liquidity and protection when the economy slows, and real assets like gold, commodities, and infrastructure for inflation, currency weakness and geopolitical stress.

As such, the important point remains the driver, not the label. Stocks depend on earnings, bonds on real rates, gold on confidence in money, commodities on scarcity and investment cycles. If everything in the portfolio needs low inflation and falling rates, you are not really diversified; you are simply making one big macro bet.

While bonds are definitely useful, they are not magical. They usually protect in recessions, but can fall with equities when inflation surprises everyone. Real assets are the opposite: often boring in calm periods, but extremely valuable when currencies weaken or energy and raw materials are tight. In today’s world of electrification and re-industrialisation, they are not just insurance, they are part of the real economy’s growth.

Geography matters too. Different regions run different policies at different times. Owning only one country and one currency is a hidden concentration. Spreading across the US, Europe and selected Asian and emerging markets therefore reduces the risk of any single policy mistake dominating the outcome.

In practice, this is not a fixed recipe, but a flexible framework. An illustrative allocation could combine 50% equities, 25% bonds and cash, and 25% real assets such as gold, commodities and infrastructure. This is neither an allocation recommended for every investor nor the composition of a mandate offered on this website: weights depend on objectives, investment horizon and capacity to bear losses, among other factors.

The weights then adjust with market conditions and client risk profiles. When inflation risk rises and currencies weaken, you tilt more toward real assets and less toward bonds. When recession risk dominates and real yields are attractive, you increase high-quality bonds and liquidity. While more conservative investors run structurally less equity risk, more dynamic investors choose to run structurally more equity risk, but without ever eliminating the stabilising or inflation-protecting blocks.

What never changes is the structure: all three engines remain present. Growth assets, stabilisers and inflation hedges coexist so the portfolio is never a one-regime bet. The objective is not a clever forecast, but a balanced mix that can adapt at the margin while staying diversified across inflation, recession and growth scenarios.

The final piece is discipline: regular rebalancing brings portfolio weights back towards agreed limits. You trim positions that have become too large and add to those that are underweight. This helps manage concentration without guaranteeing that purchases occur at market lows or sales at market highs.

For sure, it will not be the top performer every year. Nonetheless, by combining assets that respond to different forces and by keeping them in balance, the portfolio is designed to stay investable through inflation, recessions and shocks rather than to win a single macro argument.

Which long-term risks do investors most often underestimate, despite their potential to permanently affect capital?

First of all, the most underestimated and insidious risk is inflation, as even low inflation (2-3%) destroys a huge amount of purchasing power over 20 or 30 years. While a positive nominal return can hide a negative real return, recovering the full amount of capital at maturity does not necessarily preserve capital if the overall return is lower than inflation over the period in question. As such, this is an invisible risk that is not taken into account enough by most investors.

Secondly, there is the risk of capital concentration. For instance, when there is too much concentration on one country, sector, or stock, as past performance is not indicative of future results.

Thirdly, an investment approach without a clear plan in terms of diversification, duration, and risk assessment is ultimately the most destructive risk because it leads to selling during periods of crisis and often buying at the wrong time, with psychology taking precedence over analysis, and more often than not, with disastrous consequences. The next long-term risk on this list deals with long-term liquidity risk, in the sense that forced sales in poor conditions on illiquid instruments can lead to significant capital losses.

Another risk concerns major economic changes such as sustained inflation and disinflation, or even deflation which can erode long-term capital; massive public debt and its effect on long-term interest rates; changes in tax and regulatory regimes which can have negative consequences for certain sectors.

Last but not the least, you also have the risk of uncertainty. Along with inflation and behavioral risk, this is perhaps one of the most difficult risks to grasp, as investors need stability. Uncertainty increases the likelihood of strategy changes, given the negative consequences that this can entail.

Equity markets are increasingly driven by a small number of large stocks—why does this concentration create hidden risks for investors?

In 2025, the S&P 500 delivered a total return of approximately 17.9% in US dollars, including reinvested dividends. According to RBC Wealth Management’s analysis using FactSet data, seven companies contributed approximately 52% of that gain: NVIDIA, Alphabet, Microsoft, Broadcom, JPMorgan Chase, Palantir Technologies and Meta.

An index can therefore contain hundreds of companies while depending heavily on a few large positions. These businesses are not all alike, but several are exposed to technology spending and the development of artificial intelligence.

The risk is not in owning these companies, but in underestimating their combined portfolio weight. Revised growth expectations, higher interest rates or slower AI spending can affect several large positions at once. Index ownership diversifies individual holdings without removing sector concentrations or shared risk factors.

Market returns can also vary considerably by company size. Over the twelve months ending 30 April 2025, the Russell 1000 US large-cap index returned approximately 11.9%, compared with 0.9% for the Russell 2000 small-cap index, on a US-dollar total-return basis. These were not returns since the start of 2025. Source: FTSE Russell.

As such, the answer is not to avoid the winners, but rather not to rely only on them. Real diversification means adding independent drivers of performance: quality companies beyond the top weights, selected small and mid caps, international and emerging markets, as well as tangible themes like infrastructure or electrification.

How do multi-asset strategies help absorb volatility and stabilise portfolios when market regimes change?

Between 31 December 2010 and 31 December 2025, the Nasdaq 100 delivered a cumulative return of approximately 1,230%, compared with approximately 390% for the MSCI World, in US dollars with gross dividends reinvested. These rounded figures are calculated from the Nasdaq 100 Total Return series distributed by the Federal Reserve Bank of St. Louis and MSCI World annual returns (2011, 2012–2025). They illustrate the past strength of large technology stocks, not a reason to abandon diversification: results depend on the period and currency selected and do not indicate future performance.

This period was not linear. The 2018 correction, the COVID-19 sell-off in March 2020 and the 2022 regime shift highlighted the vulnerability of concentrated portfolios. In 2022, equities and bonds could fall together: an allocation across these two asset classes was not, by itself, sufficient to avoid losses.

Other assets can behave differently. In 2022, gold gained approximately 0.4% in US dollars, measured by the LBMA Gold Price PM, according to the World Gold Council. This illustrates the value of diversifying exposures without proving that a multi-asset portfolio would always have performed better. Outcomes depend on the assets selected, their weights, fees and rebalancing. Alternative investments also carry loss risks and do not provide uniform protection.

The core investment message is straightforward: asset allocation matters when macroeconomic regimes change. It involves not only selecting assets, but sizing exposures with regard to fundamentals, valuations and risks. Diversification aims to reduce dependence on a single economic outcome; it guarantees neither positive returns nor capital preservation.

The large daily swings in gold at the end of January 2026, noted by the World Gold Council, also show that a long-term investment view does not prevent abrupt short-term movements. Even an asset used to diversify a portfolio can cause substantial losses if its weight becomes excessive.

In the article of 20 February 2026, we described equity exposure with a tilt towards value stocks and emerging markets, complemented by European credit, a measured gold allocation, thematic investments, hedge funds and structured products. This was the position presented at that date, not a current allocation or a personalised recommendation.

For structured products, any principal protection depends on the product terms, maturity and the issuer’s or guarantor’s ability to repay. Selling early can result in a loss even where protection is provided at maturity. Further information on these risks: FINRA.

Why is effective risk management more about portfolio structure and discipline than about predicting market movements?

An incorrect forecast is not the only source of loss: excessive exposure or a rushed decision can amplify its consequences. Reliably predicting the next move in rates, inflation or equities is difficult. A portfolio built around one prediction therefore remains vulnerable if the scenario changes. Risk management includes limiting the consequences of being wrong, rather than assuming forecasts will always be right.

That is why structure matters more than forecasts. A portfolio diversified by true economic drivers – not just by number of stocks – behaves very differently from a portfolio diversified only on paper. Assets that respond to different forces (growth, inflation, liquidity, real assets, different regions and currencies) reduce the need for any single macro call to be correct.

Discipline puts that structure into practice. Position limits, regular rebalancing and predefined rules help prevent a dominant holding from concentrating too much risk. This can be uncomfortable at the time, but provides a framework for decisions without eliminating the risk of loss.

In that sense, good risk management is anti-heroic. It does not rely on bold predictions or perfect timing. It relies on repeatable behaviour: controlling position size, spreading exposures, and accepting that uncertainty is permanent. The added value is simple but powerful: design the portfolio so that surprises are survivable. If you are able to do that consistently, you do not need to predict markets to navigate them.

In fast-moving markets, why is long-term financial planning essential to staying invested and achieving resilient outcomes over time?

Long-term planning helps distinguish a reaction to volatility from a real change in circumstances. Leaving the market during a decline can mean missing a recovery, but staying invested does not suit every need: investment horizon, liquidity requirements and capacity to bear losses remain central.

The strongest trading days can occur during highly uncertain periods. According to an analysis presented by Hartford Funds using Ned Davis Research data, 78% of the S&P 500’s 50 best trading days between 1995 and 2024 occurred during a bear market or the first two months of a bull market (2025 chart, page 3). This historical example illustrates the difficulty of timing an exit and re-entry; it does not predict future recoveries.

The COVID-19 sell-off in March 2020 is one clear example: markets collapsed in weeks, yet a significant portion of the recovery occurred within days and weeks, long before economic data or headlines improved. Similar patterns have been observed during policy-driven or geopolitical shocks. As a result, even professional investors struggle to exit and re-enter markets consistently at the right moments.

From a behavioural perspective, FOMO (Fear of Missing Out) is a real and costly risk, because it creates a strong emotional conflict at precisely the wrong time. Investors who sell during drawdowns often do so to regain a sense of control and reduce short-term anxiety. However, once markets begin to recover, they are frequently left on the sidelines, watching prices rise while uncertainty remains high. This creates frustration, regret, and hesitation: markets appear to be “running away,” yet the investor feels it is already “too late” or fears another leg down.

As markets recover, investors may hesitate between staying out and returning at higher prices. That delay can affect performance. A plan established in advance helps assess decisions against objectives and agreed risk levels, rather than the emotion of the moment alone.

In practice, a long-term investment plan combines diversification, appropriate risk levels and liquidity needs. Regular reviews help check that it remains consistent with the client’s circumstances. The aim is to make considered, understandable decisions, without promising to capture every rise or avoid every decline.