Federal Reserve Minutes That Temper Enthusiasm

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The publication of the Fed minutes has led the market to drastically lower the probability of a 25-basis-point cut in December, from around 75% at the beginning of the month to just 37%. The minutes confirmed the lack of consensus that had already been sensed when, in September, only 10 of the 19 FOMC members supported cuts in both October and December.

The underlying bias remains “dovish,” and there is agreement that more cuts will come later, but many members prefer not to act in the final meeting of 2025. If they don’t cut now, it is likely they will do so on January 28; what is relevant is that the market has stopped seeing a “guaranteed rate-cut cycle,” and that nuance has weighed on risk assets.

Although there was discussion of financial conditions, private credit, and valuations (“some participants commented on stretched valuations in financial markets”), the central message was a rise in concern about a possible inflation rebound—more explicit than in recent public statements.

Schmid Versus Waller: Two Interpretations of the Same Cycle
In this context, the statements by Schmid, president of the Kansas Fed and the only vote against the October cut, stand out. In his view, inflation remains a broad phenomenon, persistently above 2%, while growth remains reasonable and the labor market is, overall, balanced.

This view contrasts with that of Christopher Waller, one of the most “dovish” members, who is more concerned about the risk of an economic slowdown. The debate between them encapsulates the current discussion well: is it more important to finish bringing inflation under control or to avoid excessive deterioration in employment and credit? The answer will shape the pace of cuts in 2025–2026.

A Labor Market That Doesn’t Settle the Debate
The September employment report does not settle the debate either. The U.S. economy created 119,000 jobs, above expectations, with gains concentrated in healthcare, food and beverages, and social assistance.

On the other hand, revisions to July and August subtracted 33,000 jobs, and the three-month moving average rose from 29,000 to 62,000 new payrolls, within the range that the Dallas Fed considers consistent with a stable unemployment rate. Even so, the more pessimistic analysts will rely on the monthly upside surprise to justify a less generous Fed and a slightly more strained long end of the yield curve.

The labor force participation rate rose from 62.3% to 62.4%, and the unemployment rate ticked up from 4.3% to 4.44%, very much in line with the Chicago Fed’s real-time employment model. The reasonable reading is that labor demand has increased, in a context of immigration restrictions and the gradual exit of the baby boomers, while the labor supply remains relatively scarce. This point raises some doubts about the balance between labor demand and supply.

Inflation, Productivity, and the Fed’s Room for Maneuver
If this diagnosis is correct, the possibility of a positive surprise on inflation in 2026 gains weight. The rising cost of certain goods could also affect spending on services (“crowding out”), the moderation in housing costs—the main component of the CPI—would continue, and the productivity gains associated with digitalization and AI are, by definition, disinflationary.

In that scenario, the Fed could continue cutting rates with somewhat more confidence, unlike in recent quarters, when each inflation reading reinforced caution. It is worth remembering that the Fed’s year-end unemployment target is 4.4%, and we are already slightly above that. This provides some room to prioritize anchoring inflation expectations without completely stifling activity.

Nvidia and the Verdict on the “AI Bubble”


Despite the relevance of the minutes and the labor market after the shutdown, investors’ attention was focused on Nvidia’s earnings, which became a referendum on the sustainability of the investment boom in artificial intelligence.

Jensen Huang, the company’s CEO, was clear from the start: “Demand for AI infrastructure continues to exceed our expectations,” dismissing the idea of an imminent slowdown in the investment cycle. Nvidia claims to have visibility on around $500 billion in potential revenue from its Blackwell and Rubin platforms through the end of 2026—a figure presented more as demand commitments than secured sales, but whose scale and time horizon remain highly significant.

Revenue from H10 GPUs for China is around $50 million and currently marginal. Any easing of trade restrictions between the United States and China could, therefore, generate a significant additional boost on a margin base close to 70%.

Circularity, Software Pricing, and GPU Lifespan


At the same time, news of the joint investment by Microsoft and Nvidia in Anthropic or the $100 billion program by Brookfield—also involving Nvidia and KIA—fuels the narrative about risks of “circularity” in the AI ecosystem: the same actors that sell hardware participate in financing clients and projects.

However, other developments point in the opposite direction. Alphabet has raised prices for Gemini 3 Pro by around 20% compared to the previous version, disproving the idea that AI software is being “commoditized.” The Ramp AI Index also indicates that nearly half of U.S. companies already have a paid subscription to AI tools, suggesting a growing base of recurring revenue.

On another note, a recent Bernstein report challenges Michael Burry’s thesis on GPU lifespan: the evidence points to depreciation horizons closer to six years than two. Nvidia insists that its software and parallel computing platform extend the economic life of its chips. If data centers extract more years of use from each hardware generation, ROIC improves and the narrative of “irrational capex” without return is weakened.

Nvidia as Architect of AI Infrastructure
The quarterly figures also reflect a qualitative shift: data center revenue is up 66%, and networking revenue is up 162%, reinforcing the perception of Nvidia not only as a GPU manufacturer but as a full architect of AI data centers (computing, networking, and software), capturing an increasing share of the value stack.

This result reduces the risk of a short-term “earnings cliff” and strengthens the thesis of an AI “supercycle,” though it does not eliminate all doubts. It is clear that Huang will never openly acknowledge a capex bubble, but it is also true that in two or three years, investors will demand tangible cash flows to justify the investments announced for 2026–2028. We are not yet at that point of maximum scrutiny.

Implications for Investors: Rates, AI, and the S&P 500 Over 12 Months


The recent declines seem to respond to technical and sentiment-driven factors. The market may continue to correct, but it already shows signs of being oversold, with a mood dominated by caution and even fear. It does not seem likely that AI investment will collapse in the next 12 months; the project pipeline remains substantial, and the debate is more about the pace of growth than its continuation.

With a Fed still in a rate-cutting phase, a money supply with room for expansion (especially if asset purchase programs are reactivated), and a positive fiscal impulse heading into 2026, the probability of a recession is not high, and it is feasible that, as our model indicates, corporate earnings will post growth above their historical average. In this context, an S&P 500 in the range of 7,100 – 7,700 points over 12 months is perfectly plausible, even considering some degree of multiple compression.

For investors, the key issue is not so much anticipating the next headline—a slightly more “hawkish” tone from the Fed or a renewed debate about an AI bubble—as it is seizing volatility to strengthen positions in quality assets with the ability to generate sustainable earnings in an environment of moderately lower interest rates and rising productivity driven by AI itself.

Central Scenario and Asset Allocation: Four Views to Warm Up the Engines

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As 2026 approaches, international asset managers and investment firms are outlining the main factors they believe will shape the year ahead and their preferred asset allocation strategies. Although each has a distinct perspective, they agree that as 2026 unfolds, uncertainty stemming from changes in central bank policy, geopolitical tensions, and structural shifts will define the macroeconomic landscape.

Alexandra Wilson-Elizondo, Co-Chief Investment Officer of Multi-Asset Solutions at Goldman Sachs Asset Management, says these forces are creating opportunities across public and private markets—from disruptions to secular growth themes and alternative sources of return. “We believe investors need a truly diversified, multi-asset approach that combines active cross-asset positioning, granular security selection, disciplined risk management, and explicit tail-risk hedging, in order to protect capital while also opening new avenues for growth,” she states.

Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, frames the question for 2026 as whether the powerful forces of AI, fiscal stimulus, and monetary policy easing can push global markets beyond the gravitational pull of debt, demographics, and deglobalization toward a new growth era. “Navigating these structural changes requires investors to adapt their strategies, focusing on sectors and themes where capital is flowing and transformation is underway,” Haefele notes.

So, what is the central scenario for these and other global asset managers in the coming year? And, more importantly, what asset allocation do they see as best suited to navigate that scenario? Let’s look at each one:

Robeco: A Return to 2017

Robeco foresees a cyclical, global, and synchronized rebound that would mirror the conditions of 2017, driven by the convergence of several factors: easing trade tensions, a recovery in the manufacturing cycle, and the delayed effects of monetary easing.

A key theme for the year will be central banks, which will have to navigate a “maze” as they seek balance between political pressures and an overheated economy. “Despite persistent uncertainty, the global economy is ready to play in unison—even if just a short piece,” they comment.

In Robeco’s base case, U.S. real GDP is expected to grow by 2.1% in 2026, supported by AI-driven productivity gains and fiscal stimulus from the One Big Beautiful Bill Act. However, they note that the U.S. economy remains divided: high-income consumption will remain strong, while lower-income households will feel pressure from rising tariffs and slowing job growth.

Europe’s growth engine is said to be “revving up,” with Germany showing accelerating activity thanks to fiscal stimulus. “The eurozone is expected to grow by 1.6%, supported by fiscal expansion and pent-up consumer demand. China, while still battling deflationary pressures, may see a domestic recovery in the second half of 2026 as real estate deleveraging ends,” they add.

Robeco sees continued upside for equities, especially in interest-rate-sensitive sectors and markets outside the U.S. While U.S. valuations remain high, earnings—particularly in tech—will be key. “Eurozone equities look attractive based on valuation and macro factors, and emerging markets could benefit from a weaker dollar and improved trade flows,” they state. In fixed income, Robeco favors shorter durations due to expectations of higher long-term yields.

On sustainability, Rachel Whittaker, Head of Sustainable Alpha Research at Robeco, adds: “Sustainable investing isn’t disappearing—it’s realigning. As the tempo changes, we’re holding the note in our clients’ interest while adapting to new realities. Staying focused on our long-term investment convictions reinforces the relevance and resilience of sustainable investing, as it’s grounded in science and enduring principles—not trends.”

JSS SAM: A Global Resilience Scenario

For Claudio Wewel, currency strategist at J. Safra Sarasin Sustainable AM, the keyword for 2026 is resilience. “The U.S. economy continues to show resilience, with AI investment increasingly contributing to GDP growth. Purchasing managers’ indices reflect solid activity in both manufacturing and services. Consumer confidence remains stable and largely unchanged since September. However, there are growing signs that the economy’s overall state has become more fragile,” Wewel argues.

In the eurozone, he expects improvement over time. “We are more optimistic for next year, when fiscal spending in Germany is expected to positively impact growth. So far, businesses haven’t expanded production capacity in anticipation of higher demand. Investment spending and industrial orders remain low,” he adds.

Market developments led portfolios to show slight equity overweights during the month, a position they’ve modestly increased in selected areas. “We’ve considered macroeconomic improvement, looser monetary policy, and imminent fiscal stimulus. In response to falling interest rates, we’ve reduced fixed income allocations,” Wewel explains.

They remain regionally neutral in equities and maintain a largely balanced stance across investment-grade bonds, high yield, and emerging markets. “We’re holding our gold position, though we’ve taken advantage of the sharp price increase to realize part of the accumulated gains,” he concludes.

GSAM: Public and Private Markets

Goldman Sachs Asset Management believes that AI will continue to fuel investor optimism, though it recommends a diversified multi-asset strategy based on active management and granular security selection to navigate a complex year geopolitically, monetarily, commercially, and fiscally.

In their report “Seeking Catalysts Amid Complexity,” they foresee increased dispersion in equity markets, with a favorable trend toward global equity diversification and a mix of fundamental and quantitative strategies. In fixed income, they focus on duration diversification and strategic curve positioning to navigate mixed macro signals. “Income opportunities may arise from securitized credit, high yield, and emerging markets,” they note.

In private markets, they expect 2026 to be a more constructive environment for new deals and exits, possibly leading to greater dispersion in private equity manager returns. “Private credit continues to outperform public markets, with historically lower default rates than syndicated loans. Rigorous risk assessment is essential, and opportunities are emerging in infrastructure driven by AI and the energy transition,” they assert.

UBS GWM: Will the Law of Gravity Break?

In its Year Ahead 2026 report, the UBS Global Wealth Management CIO notes that while political headlines will remain in the spotlight, history shows their impact on financial markets is often short-lived. Still, they identify several risks that could weigh on markets in the year ahead, including: disappointment in AI progress or adoption, a resurgence or persistence of inflation, a deeper phase of strategic rivalry between the U.S. and China, and renewed concerns over sovereign or private debt.

Barring these risks, UBS GWM sees AI-driven innovation as a key market driver in 2025, with the information technology sector now accounting for 28% of the MSCI AC World Index. “Strong capital expenditure trends and accelerating adoption are likely to drive further growth for AI-linked equities,” they point out.

They expect the economic backdrop in 2026 to broadly support equities, with growth accelerating in the second half of the year. Specific forecasts include: 1.7% growth in the U.S., supported by looser financial conditions and accommodative fiscal policy; 1.1% GDP growth in the eurozone; and approximately 5% growth in the Asia-Pacific (APAC) region.

With these dynamics in mind, UBS GWM recommends increasing equity exposure and exploring opportunities in China. “Favorable economic conditions should support global equities, expected to rise around 15% by the end of 2026. Strong U.S. growth and supportive fiscal and monetary policy benefit tech, utilities, healthcare, and banking, with gains likely in the U.S., China, Japan, and Europe. China’s tech sector stands out globally, supported by strong liquidity, retail flows, and expected 37% earnings growth in 2026. Broader exposure to Asia, particularly India and Singapore, could offer additional diversification benefits, as could emerging markets,” the firm states.

Their second asset allocation focus is commodities. “Supply constraints, rising demand, geopolitical risks, and long-term trends such as the global energy transition should support commodities. Within this asset class, we see particular opportunities in copper, aluminum, and agricultural commodities, while gold serves as a valuable diversifier,” they argue.

Do Nvidia’s Results Silence the AI Debate?

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Amid the emerging debate over whether an AI bubble is forming—or already exists—what do the results of the tech giant mean?

According to Richard Clode, portfolio manager of the Global Technology Leaders team at Janus Henderson, Nvidia exceeded expectations, reaccelerating growth and having already presented at its recent GTC Washington event a roadmap to reach over $300 billion in data center sales next year. He stated that this week’s agreements with HUMAIN Saudi Arabia and Anthropic contributed to that figure.

In fact, after the presentation, Nvidia’s shares surged sharply after market close, following the chipmaker’s release of a strong revenue forecast for the current quarter, reinforcing investor confidence in the growth of artificial intelligence (AI).

“The buyers’ forecasts remain well ahead of the formal consensus of the sellers, so the overnight upgrades are more of a catch-up. Still, the shares are trading at a valuation far from exaggerated, which remains a key response to recent concerns about the AI bubble and comparisons with the year 2000,” comments Clode.

Dispelling Fears

According to experts at Banca March, recent fears surrounding investment in artificial intelligence are easing after another quarter in which expectations were not only met but exceeded. “The fervor continues in a changing environment. For now, the more skeptical voices are quieting—at least until the next earnings report in February,” note the Banca March experts in their analysis.

At UBS Global Wealth Management, they believe that the continuation of investments in AI, the strong financial health of major tech firms, and the growing evidence of AI monetization reinforce their conviction that the global equity rally still has room to run in the coming months.

“Without taking positions on individual companies, we believe that having sufficient exposure to AI-related stocks is key to building and preserving long-term wealth. Investors should ensure they are present across the entire AI value chain, including the intelligence and application layers, as well as the enabling layer,” states Mark Haefele, CIO at UBS GWM.

The Concerns

However, other recent concerns have included Michael Burry’s short thesis on hyperscalers exaggerating their earnings through the underestimation of depreciation, circular financing, and recent deals with competitors’ clients. In this regard, Charlotte Daughtrey, Director of Equities Investments at Federated Hermes Limited, points out that this is more of a reality check amid the AI boom. “The market has been under pressure this week due to a drop in investor sentiment amid growing doubts about the sustainability of the AI boom. However, Nvidia’s excellent earnings provided a bright spot, reinforcing strong demand for AI infrastructure,” she explains.

Meanwhile, Patrick Artus, Senior Economic Advisor at Ostrum AM, an affiliate of Natixis IM, highlights three areas of concern in his latest analysis regarding this boom: the weight of the sectors that will be heavily affected by AI, with estimates varying widely; whether AI will complement or replace employment, which will determine macroeconomic productivity gains or losses; and who will benefit from the profits generated by AI, depending on whether the AI producer market is competitive or oligopolistic.

According to Artus, the most favorable outcomes for the economy would occur if AI impacts many sectors, complements employment, and AI users capture the majority of the gains.

United Kingdom Faces Largest Wealth Exodus in a Decade

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Throughout 2025, 142,000 millionaires will change countries. This figure represents the largest global movement of high-net-worth individuals recorded in recent history. According to the Henley Private Wealth Migration Report 2025, the United Kingdom tops the list of countries with the highest net loss of millionaires, with a projected 16,500 departures—far surpassing China, which, for the first time in ten years, falls to second place with 7,800.

This phenomenon, which reflects a profound shift in global elite mobility trends, is driven by tax changes, perceptions of political stability, and new investment opportunities in other destinations. “2025 marks a turning point. For the first time in a decade, a European country leads the millionaire exodus. This is not just about taxes, but about a deeper perception that opportunities, freedom, and stability lie elsewhere in the world,” says Dr. Juerg Steffen, CEO of Henley & Partners.

Key Trends


In addition to the United Kingdom, France, Spain, and Germany will also experience net losses of high-net-worth individuals in 2025, with projected outflows of 800, 500, and 400 millionaires, respectively. Other countries such as Ireland, Norway, and Sweden are beginning to show similar signs. By contrast, Switzerland is solidifying its position as one of the main wealth havens in Europe, with a net inflow of 3,000 millionaires, while Italy, Portugal, and Greece are set to experience record arrivals—driven by favorable tax regimes, high quality of life, and active investment migration programs. Meanwhile, Monaco, with more than 200 new millionaires, continues to attract the ultra-wealthy, particularly from the UK, Africa, and the Middle East.

On the global stage, the United Arab Emirates once again ranks as the most popular destination, with an estimated net inflow of 9,800 millionaires. It is followed by the United States (+7,500) and Saudi Arabia (+2,400), the latter on the rise thanks to the arrival of international investors and the return of nationals.

In Asia, Thailand is beginning to challenge Singapore’s dominance, with Bangkok emerging as a new regional financial hub. Hong Kong and Japan are also showing rebounds, while Taiwan and South Korea are facing significant outflows due to geopolitical tensions and economic factors.

In the Americas, flows to Costa Rica, Panama, and the Cayman Islands stand out, while Brazil leads the wealth exodus in Latin America with a net outflow of 1,200 millionaires, followed by Colombia (–150). The U.S., Portugal, and Costa Rica are among the top destinations for wealthy Latin Americans.

The British Case: From Wealth Magnet to “WEXIT”


Since the Brexit referendum in 2016, the United Kingdom has shifted from being a destination for millionaires to a net exporter of wealth. The projected outflow of 16,500 millionaires in 2025 is largely attributed to tax reforms introduced in the October 2024 budget, which significantly increased taxes on capital gains and inheritances and altered tax benefits for non-domiciled residents.

This mass departure has been dubbed “WEXIT” (wealth exit) and is prompting many affluent individuals to relocate to more favorable jurisdictions such as Dubai, Monaco, Malta, Switzerland, Italy, Greece, and Portugal.

“The UK has been the only country among the world’s top 10 economies to record a decline in millionaires since 2014, with a 9% drop, compared to an average growth of 40% across the rest of the group,” explains Prof. Trevor Williams, former chief economist at Lloyds Bank.

The Future of Wealth: Asia at the Center of the Board


Despite the challenges, Asia remains the world’s economic engine. While China and India continue to show net outflows, they are also showing signs of stabilization, driven by their tech and entertainment sectors. At the same time, Singapore and Japan are solidifying their roles as new wealth hubs, while South Korea and Taiwan illustrate how geopolitical tensions can influence the residency decisions of the ultra-wealthy.

“The wealth landscape in Asia is a mix of ambition and caution. Asia will remain at the heart of global wealth trends in 2025,” concludes Dr. Parag Khanna, author and founder of AlphaGeo.

Amundi and ICG Announce a Long-Term Strategic and Shareholding Alliance

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Amundi and ICG, Private Markets Asset Managers in Europe, Establish a Long-Term Strategic Alliance in Distribution, Product Development, and Shareholding

Specifically, Amundi will acquire a 9.9% economic stake in ICG, becoming a strategic shareholder without diluting existing ICG shareholders, thereby strengthening the long-term alliance.

A 10-Year Exclusive Distribution Agreement

Under the terms of the agreement, Amundi will be the exclusive global distributor in the wealth channel for ICG’s evergreen and other specific products for the next ten years. In turn, ICG will be the exclusive provider of these products for Amundi’s distribution business. Both firms have also committed to jointly developing new products specifically designed for and suited to wealth investors.

According to Amundi, “this partnership creates new and exciting opportunities for both parties.” It allows Amundi to benefit from ICG’s investment expertise and track record to accelerate its distribution of private assets, one of the most dynamic areas in asset management. Meanwhile, ICG will benefit from Amundi’s international distribution capabilities in the wealth channel and its structuring expertise in designing investment solutions for wealth clients—a high-growth segment in private markets.

Key Statements

“This alliance with ICG, a recognized and diversified leader in private markets, represents an outstanding opportunity to offer our retail clients and the entities and clients of the Crédit Agricole group access to high-performing strategies with a proven track record, traditionally reserved for institutional investors. This is fully aligned with Amundi’s strategic plan, which aims to reinforce our leadership by expanding our offering in promising segments supported by long-term trends. Such is the case with the private assets market, whose opening to wealth investors responds to their growing need for diversification and long-term retirement savings accumulation. This partnership opens up highly promising new opportunities for both parties and is expected to be a driver of profitable and sustainable growth for the benefit of all stakeholders,” said Valérie Baudson, CEO of Amundi.

Benoît Durteste, CEO and CIO of ICG, added: “Our long-term strategic partnership with Amundi marks a significant step forward in developing ICG’s strategy to access the wealth management channel in a way that is clearly complementary to and additive to our strong existing institutional offering. Combining ICG’s investment expertise and entrepreneurial mindset with Amundi’s structuring capabilities and broad distribution network creates a differentiated partnership with substantial potential and significantly accelerates our ability to access and shape evolving wealth management channels for private markets. At the heart of this relationship is a shared philosophy: that investment performance remains central to our long-term success. We are proud of our reputation for unwavering focus on delivering superior investment performance, and we are excited to work with Amundi to develop more products and strategies tailored to the important and growing wealth management market for private investments.”

First Steps

The firms explain that Amundi and ICG will initially focus on developing, during the first half of 2026, two perpetual European funds: a secondary private equity fund and a private debt fund. Both parties have also committed to developing a broader range of investment strategies and products suited for wealth investors. “This partnership will also allow Amundi to offer Crédit Agricole Assurances opportunities to diversify and expand its allocation to private assets, particularly in private debt,” they add.

The collaboration is expected to deliver significant value to stakeholders of both firms and reinforce their strategic positions and long-term ambitions in private markets.

Amundi’s Equity Investment in ICG

The firms note that Amundi’s equity investment in ICG underlines the strategic and long-term nature of the partnership, as Amundi intends to acquire an economic stake of up to 9.9% that will not dilute the holdings of existing ICG shareholders. Amundi will appoint a non-executive director to ICG’s board, allowing it to actively participate in the group’s strategic decisions. Within Amundi, the investment will be fully accounted for using the equity method.

Two Players With Complementary Expertise

Currently, ICG manages nearly $125 billion (€108 billion) in assets on behalf of primarily institutional clients across various strategies in structured capital, private equity secondaries, private debt, credit, and real assets. Meanwhile, Amundi manages €70 billion in private market assets, primarily built around real estate and multi-management activities, strengthened in 2024 by the acquisition of Alpha Associates.

The companies highlight that the partnership between ICG and Amundi will allow more than 200 million retail investors served through Amundi’s global distribution network to access a range of diversified, high-performing private market strategies from ICG through products specifically aimed at wealth management and retirement planning. “Amundi has recognized expertise in structuring investment vehicles suited for this clientele (including evergreen funds, closed-end funds, blended strategies, and ELTIFs). It serves a network of over 600 distributors, including retail banks, private banks, asset managers, insurers, and digital platforms, as well as the regional banks Crédit Agricole, LCL, and Indosuez Wealth Management,” they state.

Six Reasons Why Securitization Could Be the New “Gold Mine” for Asset Managers

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In an environment of rising prices for precious metals, many asset managers are seeking more efficient mechanisms to channel, finance, and distribute exposure to this segment. As of the end of October 2025, gold and silver posted double-digit gains, fueled by growing economic uncertainty in the United States and rising expectations of a short-term rate cut by the Federal Reserve. According to TradingEconomics data, gold has surpassed the US$4,100 per-ounce threshold, while silver stands at US$51—levels not seen in more than a decade.

 

At the same time, ETFs backed by physical gold have recorded unprecedented demand. According to the World Gold Council, in October 2025 alone these products attracted US$8.2 billion in net inflows, marking five consecutive months of positive flows. This scenario reinforces the market’s interest in instruments that offer diversified, liquid, and regulated exposure to the metals’ bullish cycle.

Source: World Gold Council. Gold ETF Flows: October 2025

Investment advisors view gold ETFs as a hedge against a wide range of risks, such as the depreciation of the US dollar, rising public debt, persistent inflation, geopolitical tensions, and more recently, concerns regarding the Federal Reserve’s independence.

Meanwhile, precious metals futures remain intrinsically volatile instruments: they expire periodically, require margin, and must be continuously rolled over. For asset managers, trading these contracts directly can be complex and costly, especially when integrating them into broader portfolios or distributing exposure among different types of investors.

In this context, asset securitization emerges as a strategic alternative for managers holding positions in precious metals futures. Through a Special Purpose Vehicle (SPV), the economic flows generated by a derivatives portfolio can be transformed into structured financial instruments—such as notes or tranches (senior, mezzanine, and equity)—simplifying exposure and expanding distribution possibilities.

 Strategic advantages for the asset manager

  1. Operational simplification:

Securitization allows managers to offer exposure to precious metals without requiring each investor to open futures accounts or manage margin and rollovers. The SPV handles the day-to-day operations internally, while the portfolio is presented clearly and in a regulated manner through daily NAV and defined collateral rules.

  1. Broader distribution base during price rallies:

In bullish periods like the current one, many institutional clients cannot—or do not wish to—trade derivatives directly. Securitization converts the strategy into an accessible, standardized product (with an ISIN), facilitating distribution through brokers, private banks, platforms, and secondary markets, and enabling its inclusion in portfolios that require securities rather than derivatives.

  1. Risk segmentation and credit isolation:

The futures portfolio is housed within the SPV, ring-fenced from other manager assets. This protects client exposure from manager balance-sheet risks and ensures clear collateral rules, fiduciary oversight, and auditing. Managers can therefore offer a robust, transparent, and predictable solution instead of a complex, operational futures portfolio.

  1. Flexibility for thematic or structured products:

The structure allows the creation of notes with controlled leverage, coupons, metal combinations, or multi-asset strategies. This makes it possible to launch products without creating a new fund, capturing specific demand during price rallies.

  1. Speed of implementation:

Unlike ETFs or funds, securitization vehicles allow swift action to capture flows during periods of high demand. For managers, this means being able to offer immediate exposure to metals while market interest is at its peak.

  1. Lower minimums and democratization:

Trading futures directly requires significant capital and complex operational management. A securitized note can reduce minimum investment tickets, enabling a manager to distribute the strategy among various segments of professional and institutional clients.

Comparison: Direct futures vs. securitized note

 

Securitizing precious metals futures offers managers a way to monetize, redistribute, and scale their commodities exposure at a time of strong demand—optimizing capital, diversifying funding sources, and attracting new investors without giving up participation in markets with solid fundamentals.

In a cycle in which gold and silver are solidifying their role as safe-haven and yield-generating assets, securitization stands out as an advanced management tool that combines financial innovation, operational efficiency, and strategic vision—exactly what distinguishes the modern asset manager.

At FlexFunds, we designed an asset securitization program through Irish Special Purpose Vehicles (SPVs), supported by top-tier service providers such as BNY, Interactive Brokers, Morningstar, and Bloomberg, enabling efficient distribution of investment strategies across multiple international private banking platforms.

If you would like to learn more, please feel free to contact one of our experts at info@flexfunds.com

Michael Burry, Famous for the Film The Big Short, Shuts Down the Hedge Fund Scion Asset Management

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Michael Burry, the investor known for his accurate bets against the U.S. housing market in 2008, has deregistered his hedge fund, Scion Asset Management, from the records of the U.S. Securities and Exchange Commission (SEC). The U.S. market regulator’s database listed Scion’s registration status as “cancelled” as of November 10. The deregistration would mean that the fund is no longer required to file reports with the regulator or any state, according to Reuters.

Scion’s bets, which managed $155 million in assets as of March, have long been analyzed by investors as indicators of potential impending bubbles and signs of market froth. Investment funds managing more than $100 million in capital are required to register with the SEC.

Burry is said to have written a letter to the fund’s investors, which was circulated via the social network X (formerly Twitter), in which he announced “with a heavy heart” the fund’s liquidation and the return of capital to investors by the end of the year. “My estimation of stock values is not now, nor has it been for some time, in tune with the market,” the letter reads.

A few days earlier, Burry wrote on his X profile: “On to much better things on November 25.” Burry, who appeared in the well-known book and film The Big Short, has in recent weeks intensified his criticism of tech giants, including Nvidia and Palantir Technologies, questioning the rise of cloud infrastructure and accusing major providers of using aggressive accounting to inflate profits from their massive hardware investments.

In his post on X, Burry stated that he had spent around $9.2 million on the purchase of approximately 50,000 put options on Palantir, noting that the options would allow him to sell the shares at $50 each in 2027. Put options grant the right to sell shares at a predetermined price in the future and are typically purchased to express a bearish or defensive outlook. Palantir shares were trading at $178.29 on Thursday, giving the company a market value of $422.36 billion.

Bearish Positions on Artificial Intelligence

Last month, Burry posted an image of his character from The Big Short and warned about bubbles, saying that “sometimes, the only winning move is not to play.” In his criticism of tech firms, Burry argues that as companies like Microsoft, Google, Oracle, and Meta invest billions of dollars in Nvidia chips and servers, they are also quietly extending depreciation schedules to make earnings appear smoother. To such an extent that, by his estimates, between 2026 and 2028, these accounting decisions could understate depreciation by around $176 billion, inflating reported profits across the sector.

His X profile, titled Cassandra Unchained, is seen as a nod to the Greek mythological figure cursed by Apollo to utter true prophecies that no one would believe.

The appreciation in shares of companies related to artificial intelligence has accounted for 75% of the S&P 500 index’s performance since November 2022, when OpenAI launched ChatGPT, according to a September analysis by JP Morgan Asset Management.

Scion, Burry’s firm, ended last year holding positions in American Coastal, Bruker, Canada Goose, HCA Healthcare, Magnera, Molina Healthcare, Oscar Health, and VF Corp, but the firm exited those positions earlier this year. During the quarter ending June 30, Scion Asset Management took a more optimistic stance on companies across different sectors and geographies, after previously betting against Chinese companies when President Donald Trump’s administration was considering the imposition of tariffs.

Challenges for Short Sellers

Burry, who founded Scion Asset Management in 2013, joins a group of high-profile investors navigating a market that has become increasingly hostile to bearish views in recent years, fueled by unrestrained optimism surrounding technology and strong interest from retail investors.

In this context, Hindenburg Research shut down earlier this year after a series of high-profile calls, including bets against Indian conglomerate Adani Group and U.S. electric truck maker Nikola.

Veteran short seller Jim Chanos, known for his bets against energy firm Enron months before its collapse, has also clashed with Michael Saylor’s bitcoin-focused company, Strategy. Chanos argued that Strategy’s valuation premium was unjustified—a criticism that prompted a sharp response from Saylor.

What Do We Buy When We Buy Gold?

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Friendvesting riesgo geopolítico
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In 1992, a farmer in Suffolk stumbled upon the largest hoard of Roman coins ever found. Unknowingly, he had uncovered a story of crisis and the search for safety, when the Saxons invaded the area and a Roman family buried their gold. This treasure, known as the Hoxne Hoard, would remain undiscovered—but still precious—for 1,600 years. The family never got to use their safe-haven asset.

Today, gold is the subject of intense debate. Warren Buffett dismisses it as an asset that “only increases if the number of fearful people grows.” Ray Dalio counters that gold is “undervalued,” especially at a time when we are losing a monetary regime.

So, is gold a source of real losses, a store of value, or even a generator of value? Of course, the answer is nuanced. To understand gold, we must examine three questions: why investors buy it, why its price behaves so strangely, and whether its scarcity will endure.

Three Classic Reasons to Own Gold

1. Inflation

In the time of Nebuchadnezzar, an ounce of gold could buy 350 loaves of bread at approximately $7.90 each (adjusted to today’s value), roughly the same price as a loaf of bread at an artisanal bakery today. A thousand years later, gold still retains similar purchasing power and acts as a powerful hedge against inflation.

But timeframes matter. Over periods shorter than 20 years, gold proves unreliable, with volatility rivaling that of the S&P 500. Only over long periods has gold historically maintained its purchasing power. Therefore, for investors with very long horizons, it can serve as a hedge—but for shorter timeframes, it’s a risky bet.

2. Diversification

Gold is a safe haven against equities, with a very compelling track record. Historically, it has outperformed many alternatives for portfolio protection, and its average 10-year correlation with stocks is close to zero. But this relationship is not constant. Over time horizons shorter than a decade, correlations can turn positive, and benefits may evaporate when they are most needed.

3. Crisis Hedge

During the last 11 stock market downturns, gold delivered positive returns in eight of them. Even when it declined, the drop was far smaller than that of equities. Unlike costly put options, gold can generate positive returns both in crisis and non-crisis environments.

Inelastic Bands

As suggested above, the long-term price of gold appears inelastic. There is a “golden constant,” meaning gold seems to be a continuous store of value over the long term.

Why? Gold mining is difficult, expensive, and geographically dispersed. Globally, no one controls production, and China, the largest producer, accounts for only 12.5% of output.

Annual production is just 3,300 tons. Thus, the total amount of gold mined to date is tiny compared to other precious commodities like silver. It fits in a 23-meter cube—about the size of an Olympic swimming pool—and supply barely responds to price changes.

However, this inelasticity causes sharp short-term price swings, driven almost entirely by demand. Understanding this should, at the very least, influence the decision to invest in gold in the short and medium term.

The real price of gold is in some ways similar to the price-to-earnings (P/E) ratio. When the P/E is very high, expected returns on stocks are low because we anticipate some mean reversion. Similarly, since the real price of gold has remained relatively constant over the very long term, when the real price of gold is high, we expect some reversion.

Today, gold is also expensive compared to crude oil, silver, and copper. Historical patterns suggest low or even negative real returns over the next decade. While it’s important to remember that structural demand stemming from de-dollarization and possible regulatory changes could sustain prices longer than history suggests, investors buying at current levels are likely paying for safety and optionality—not growth.

The Constant May Not Be Sacred

What’s more, the gold constant is not sacrosanct. In 2004, the introduction of gold ETFs gave retail and institutional investors easier access to gold. This met pent-up demand and caused a structural shift in the price level—or the gold constant.

More recently, this relationship shifted again. The People’s Bank of China now leads global gold purchases, driven by fears over the weaponization of the dollar after the U.S. cut Russian banks off from SWIFT in 2022. China has established bilateral swap lines to reduce dollar dependency. Reserves are being diversified, and gold tops the list.

And more changes may lie ahead. Basel III regulations could be another catalyst. A 3% allocation to gold for banks’ high-quality liquid assets would trigger a demand surge comparable to the one caused by the introduction of gold ETFs.

What About Threats to Gold’s Scarcity?

Two main threats have emerged. Near-Earth asteroid 1986 DA contains approximately 100,000 tons of gold worth $10 trillion (at market prices). It is small (2.3 km) and requires no more fuel to reach than the Moon. Companies like AstroForge are already planning missions, while smaller, closer asteroids like 4660 Nereus offer even easier targets.

Secondly, nuclear alchemy is underway. Scientists transmuted bismuth into gold in 1980, albeit in microscopic amounts. Mercury, gold’s nearest atomic neighbor, is cheap and abundant. As nuclear fusion technology advances, large-scale transmutation may become theoretically possible.

If any of these initiatives succeed, the scarcity premium of gold could diminish.

The Golden Ratio

Gold is expensive today, so it’s unlikely to be a high-performing asset in the coming years. Long-term threats to its scarcity are real. However, in a world with $38 trillion in U.S. debt, weaponized currencies, and declining trust, gold offers something rare: an asset that no government controls and no central bank can print.

Gold’s expected return may be lower in the future, but it could serve as an insurance policy. The Romans who buried the Hoxne Hoard understood this—even if it didn’t save their lives.

Markets Digest the End of the U.S. Government Shutdown With Mixed Sentiment

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Joy and caution have been the two dominant sentiments in the market following the end of the longest U.S. government shutdown in history, lasting 43 days. On one hand, in the U.S., Wall Street traders drove most equities higher while bond yields declined. On the other, investors remained mindful that a return to normal will take weeks, and the core agreement only runs until January 31 of next year.

Paul Dalton, Head of Equities at Federated Hermes Limited, commented: “The resolution of the U.S. government shutdown removes some short-term uncertainty and is undoubtedly a positive development. However, we’re aware that this is only a temporary truce. The next deadline will come quickly. It remains to be seen whether this pause will create room for negotiating a more lasting agreement. For global equities, the outcome has been moderately favorable, and the resumption of data collection should give investors better visibility into the state of the U.S. economy. That said, delayed data may create ambiguity around the true economic situation, and key risks remain, such as the strength of the U.S. consumer and the ongoing debate over whether the AI trade is a bubble.”

The Optimism

Benoit Anne, Senior Managing Director of the Strategy and Insights Group at MFS Investment Management, highlighted the good news: “Analysts will once again benefit from the resumption of official data flows. It also means the negative growth impact of the shutdown will be fairly limited. The key question now is what kind of macroeconomic picture will emerge. Labor data seems to be setting the tone, though it may continue to send mixed signals.”

The optimism surrounding the end of the U.S. government shutdown helped U.S. equities extend gains on Tuesday. Historically, such shutdowns have had a limited impact on markets, so the quick shift in investor sentiment should come as no surprise. For Mark Haefele, CIO of UBS Global Wealth Management, “The Federal Reserve’s accommodative monetary policy, strong corporate earnings, and robust AI spending have been the main market drivers and should continue to support the equity rally. We believe U.S. stocks still have upside potential and expect the S&P 500 to reach 7,300 by June 2026.”

The Caution

Anthony Willis, Senior Economist at Columbia Threadneedle Investments, agreed that the reopening will finally provide the Fed with greater clarity on economic data and policy direction—an absence that had stalled legislative activity. But he warned: “Even if the shutdown’s economic impact was limited, flight delays and risks to food stamp disbursement brought the situation to a critical point. Other challenges persist, such as the Supreme Court review of tariffs imposed by President Trump.”

Banca March noted that financial markets are cautiously welcoming the government’s reactivation, aware of its temporary nature. Investors remain focused on delayed macroeconomic publications, and next week’s anticipated Nvidia results add to the ongoing AI debate.

“In the coming days, publication calendars from affected agencies will be updated, and the final decision on the matter will be made. This calendar will be key, as the data will be used by the Federal Reserve Committee in its monetary policy meeting scheduled for December 10. Though the return to normal will be gradual, it comes just in time for the holiday season. The worst economic impact has been avoided, and the Trump Administration is presenting this reopening once again as a victory in a crisis that was, in reality, self-inflicted,” Banca March stated in its daily report.

Muzinich & Co offered a more critical view, suggesting the U.S. is at the center of rising global caution. “Investors are stress-testing the wall of worries—growth, geopolitics, valuations, liquidity, and imbalances—in a financial version of Jenga. In other words, sentiment has deteriorated. Our preferred indicator, the VIX index, recently crossed the 20 level, indicating rising uncertainty. The U.S. is at the heart of this global uncertainty spike, beginning with the partial government shutdown—the longest on record—estimated to have cost the economy about $15 billion per week.”

Assessing the Shutdown’s Impact

Experts believe that much of the economic activity lost in recent weeks will be recovered as federal employees return to work and receive full back pay. “The U.S. GDP for Q4 is expected to be reduced by several tenths of a point due to the shutdown, but much of this should be offset by stronger output in Q1 2026, boosting full-year growth. We forecast 2.4% growth for next year, up from 2.1% this year, despite rising threats to U.S. economic momentum,” analysts noted.

While short shutdowns usually have limited economic effects, this one could leave a lasting mark due to its record length. The Congressional Budget Office recently estimated that around $11 billion in economic activity could be permanently lost, according to Dennis Shen, Chair of the Macroeconomic Council at Scope Ratings.

Finally, Susan Hill, Head of Government Liquidity at Federated Hermes, highlighted the shutdown’s impact on liquidity markets due to the lack of official data and how this may have influenced Fed policy discussions. “We welcome the end of the shutdown and the return of data ahead of the December FOMC meeting. Technically, the Treasury’s elevated operating cash balance—partly a result of delayed outflows during the shutdown—has contributed to higher overnight funding rates at the short end,” Hill concluded.

Jim Caron (Morgan Stanley IM): “Investing Today Requires Looking Beyond Tariffs: Fiscal Policy and Deregulation Are Game Changers”

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Jim Caron investing today beyond tariffs
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Equities have risen steadily throughout 2025, even in the face of geopolitical uncertainty and market volatility. In the opinion of Jim Caron, Head of Macro Strategies for Fixed Income and Portfolio Manager at Morgan Stanley IM, and despite his fixed income focus, the standout asset this year has been equities: “Valuations and price levels have continued to rise steadily despite general and geopolitical uncertainty. This asset class has proven resilient to crises, recovering more strongly after each downturn.” With two months left in the year, the manager offered an early assessment of 2025 in his latest interview with Funds Society.

What is your assessment of the performance of the main asset classes so far this year?
We’re in a year where both fiscal and monetary policy appear to be working in tandem, resulting in a revival of both equity and bond assets. Fiscal stimulus and monetary easing can be observed in Germany, Japan, and the United States, which favors equities. In the U.S. and Europe, monetary policy is easing, which benefits bonds. Only the Bank of Japan is gradually raising interest rates, and even then, from very low levels.

The alternatives landscape is mixed. Private credit has been well-valued and has recently entered a phase of stress. Private equity, on the other hand, seems to have stabilized at lower levels, and for those with patience, this may be a good time to gain exposure.

2025 has been marked by Trump, geopolitics, and monetary policy. How has this impacted and changed how managers have approached investment opportunities this year?
Investment managers have learned to analyze policy holistically. Beyond tariffs, which are negative, these are offset by deregulation and fiscal stimulus policies, which are positive. The key lies in considering all three factors and not focusing solely on tariffs in order to have a global view and assess the net effect of tariffs, fiscal policy, and deregulation on asset performance. So far, the net balance is positive for the market.

Looking ahead to 2026: what do you think will be the main themes to watch next year?
The labor market is fundamental. If the labor market weakens significantly, consumption and profit margins will suffer. This will lead to more layoffs and a decline in consumption and GDP. That’s the main focus. Business investment, capital spending, and whether these will not only continue in 2026 but also lead to greater economic productivity supporting potential growth, earnings, and valuations are also being closely watched.

More and more institutional investors are demanding customized solutions over standardized products. What types of tailored structures or strategies are you developing to meet this need?
This is a broad area, but let me highlight one example. Many investors are seeking to incorporate both public and private markets into their portfolios. Return objectives and liquidity needs are not uniform, so customized solutions are essential. Our team has been designing and managing portfolio risk across public and private markets for nearly 20 years. This type of strategy was primarily used for institutions, OCIOs, and high-net-worth investors. However, today we can offer more personalized portfolio solutions in both public and private markets to clients with a much lower minimum investment requirement.

The Portfolio Solutions Group is described as an innovation “laboratory” in asset management. How are you integrating quantitative tools, artificial intelligence, or advanced optimization models into the asset allocation process?
We have incorporated large language models and AI tools to help us identify sectors and individual companies and build equity baskets tied to market trends. Essentially, we’ve developed a thematic investment approach that goes beyond traditional factor-based investing to implement our views and build portfolios. We can quickly absorb a vast amount of information and data and distill it into actionable insights that become thematic expressions of our views. We believe this is the way forward for investing.