Investing in a fragmented world: challenges and opportunities for global funds
For many years, investing across different parts of the world was a relatively straightforward task. We were enjoying a period in which globalisation supported economic growth, financial markets moved in tandem and diversified exposure across the US, Europe and emerging countries generally delivered solid returns without too much turbulence. In that context, the conventional wisdom was that the sector mattered more than geography. Global fund managers could find opportunities in various regions because the economic landscape was more stable and political risks were relatively tame.
That equilibrium has now shifted. Today, we face a far more complex world, marked by armed conflicts, tensions between major powers, trade wars and growing distrust among nations. International politics has once again become a key factor in economic and investment decisions, forcing investors and fund managers to rethink many ideas that were once deeply ingrained.
The 2020 pandemic was a turning point, exposing the fragility of a deeply interconnected world. Supply chains were disrupted and many companies had to reconsider where and how they produce goods. This was followed by Russia’s invasion of Ukraine, which not only transformed how Europe sources its energy, but also led to new geopolitical alliances, heightened instability in Eastern Europe and sharp increases in gas, oil and food prices.
These developments accelerated a trend we might call “selective deglobalisation”. Investment decisions now depend not only on a country’s growth prospects, but also on its political stability, adherence to international norms and position within a new global order that is still taking shape. Factors like energy independence, technological security and institutional strength now carry as much weight as traditional macroeconomic indicators.
In this new landscape, global funds can no longer rely solely on traditional benchmarks or standard regional allocations. Beyond the economic data, it is now essential to assess each country’s institutional robustness, legal framework, exposure to political conflicts and role on the international stage.
Certain emerging markets are gaining prominence in this new context. India, Indonesia, Vietnam and Mexico, for instance, are benefiting from a phenomenon known as industrial relocation. Many companies are looking to reduce their reliance on China and are shifting production to these countries, which offer competitive costs and greater regulatory stability.
Latin America is also attracting renewed attention, particularly due to its abundance of critical raw materials (such as lithium, copper and nickel) essential to the global energy transition. Countries like Brazil, Chile and Peru are increasingly seen as more stable than other emerging economies.
Europe, by contrast, faces significant challenges: internal political friction, energy dependency and an uneven economic recovery across member states. That said, Europe shouldn’t be dismissed; instead, it calls for a more selective and tactical approach, with a sharp focus on choosing the right sectors and companies.
Amid all this uncertainty, thematic investing is gaining ground. This approach focuses on structural global trends that transcend geographic boundaries and business cycles. Sectors such as defence, cybersecurity, semiconductors, renewable energy, artificial intelligence, data storage and green hydrogen are attracting growing capital flows from both institutional and retail investors.
Geopolitical tensions have made defence and technology increasingly critical. Meanwhile, the energy transition, once framed as an environmental imperative, has become a matter of national strategy, with countries striving for energy self-sufficiency.
Many global funds now incorporate these themes not as passing fads, but as long-term strategic convictions. Analysing such megatrends helps to build portfolios that are more resilient to change and better positioned for future opportunities.
In this shifting landscape, flexible investment strategies are gaining traction, such as dynamic multi-asset funds, global macro vehicles and absolute return products. These products are not tied to fixed benchmarks, allowing them to adapt more nimbly to changing conditions, manage risk effectively and achieve true diversification.
For many private banking clients, these strategies are particularly valuable, providing a way to protect capital and stay on course, even amid heightened uncertainty.
For years, passive investing (simply tracking an index) served investors well. But with growing divergence across regions, sectors and investment styles, the role of the active manager has returned to the spotlight.
Today’s environment demands experience, deep analysis and strategic foresight to anticipate shifts and make informed decisions. It not enough to simply invest broadly; knowing where to allocate capital, why and for how long has become essential.
Investing globally is no longer about spreading capital across the US, Europe and Asia. It now requires an understanding of a new world order, where politics, technology, security and sustainability are reshaping the rules of the game.
Investment funds remain indispensable tools for accessing global markets, but their selection now requires a critical, strategic lens. Portfolio management should go beyond chasing returns, aiming instead to build resilient strategies capable of adapting to a rapidly changing world.
Even in a more divided global landscape, opportunities remain for those who know where to look.
Cinco Días, 05/07/2025