Global markets have had a volatile year, rewarding some trades while punishing others. CNBC asked six investors to identify the biggest risks they see and how they are positioning their portfolios. Although they disagreed on the biggest threat, they repeatedly came back to the same answer: diversify beyond this year’s biggest winners.
Chris Rush, investment manager at IBOSS, said the real hazard is being overexposed to the market’s recent stars. “It is easy to focus on the short-term noise,” he told CNBC, but he argued that U.S. equities already make up such a large slice of global portfolios that concentration poses a bigger danger. The so-called U.S. exceptionalism has faded from where it stood before 2025, and rising debt among the Magnificent Seven makes chasing those same names riskier.
To broaden exposure, Rush’s team is turning to real estate investment trusts, which he said have been out of favor for years but now look increasingly attractive from a valuation perspective, as well as U.K. equities and stocks in Asia and emerging markets. China, he noted, has performed particularly well during the most recent pullback and remains well positioned.
Ben Kumar, head of strategy for wealth, investment and public policy at 7IM, said the big challenge this year hasn’t been managing overall volatility, but managing specific volatility. “The winners and losers have kept chopping and changing,” he told CNBC. While the wins have been bigger than the losses, being too exposed to any one theme, sector or style has been very tricky. Energy stocks have been the best and worst performers twice this year, as have IT stocks. “Everything has worked at some points, nothing has worked at all points,” Kumar said. Diversification has helped hugely, across sectors and regions. And if, like his firm, you’re prepared not to go all in on winners, it’s been a pretty good year. His advice: “You don’t need to be a hero in this market, just let it work for you, and keep your exposures broad. Don’t die trying to be a hero.”
Ben Seager-Scott, chief investment officer at Forvis Mazars, told CNBC that two powerful forces are pulling markets in opposite directions: the Iran war and strong U.S. corporate earnings. He warned that markets risk becoming complacent around events in the Middle East, inflationary pressure and shifts in the AI trade. His team has been “finessing” portfolios, cutting back some of their equity risk overweight while remaining marginally overweight, and rotating out of mega-cap technology into ordinary U.S. stocks, mostly by shifting from market cap weighted exposures to equal weight exposures.
Charlie Ambler, co-chief investment officer and partner at Saltus, said the biggest risk to portfolios in his team’s view is a policy bind around interest rates. “Central banks are struggling to bring long-term rates under control at precisely the moment the economy is absorbing a massive AI infrastructure buildout, which is capital-hungry and inflationary at the margin,” he said. The problem is that the required tonic, raising short-term rates, has become harder to pull. Policymakers are left with an uncomfortable trade-off between controlling inflation and maintaining financial stability. Ambler said portfolios need to be positioned for the possibility that they don’t get it cleanly right. In response, his team is broadening out, widening exposures across equities, fixed income and alternatives. Within alternatives, the focus is on assets whose returns don’t simply move in line with equity and bond markets.
Steve Brice, global chief investment officer at Standard Chartered, said the biggest cyclical risk is that something disrupts the global AI boom, while the biggest structural risk is the outlook for fiscal policy and inflation. He cautioned against a “barbell approach” of investing heavily in growth areas while holding excessive cash. While the former has been very profitable, he said, the latter is sub-optimal because purchasing power is likely to be eroded. He argued for a more diversified portfolio, increasing allocation to other areas of equities such as developed market financials and euro area industrials, and ensuring portfolios are buffered by allocations to bonds, gold and other alternative asset classes where possible.
Billy Leung, an investment strategist at Global X ETFs, said markets are currently running “two live risk debates in parallel.” On the acute side, the Strait of Hormuz situation remains unresolved, so the geopolitical premium in oil is not going away quickly. But the more durable risk sits with AI capex. The scale of financing now being committed to AI infrastructure buildout, well into the hundreds of billions, is reviving a genuine debate about circular financing structures and weak free cash flow conversion across parts of the AI ecosystem. That, he said, is the risk with the longer tail, because unlike a geopolitical shock, it does not resolve on a single headline.
Leung said positioning data shows equity investors are not taking a particularly defensive stance despite resurging bouts of volatility. “If anything it looks under-hedged,” he said. Implied volatility across major indices and ETFs has been drifting down toward one-year lows, and skew is sitting near the bottom of its range, which points to broad-based bullishness rather than fear. On sector rotation, the clearest beneficiaries have been data center-linked industrials, energy and travel, while healthcare, staples and real estate have lagged.
The trigger most likely to force a real repositioning, according to Leung, is AI capital spending durability rather than macroeconomic data signals. There is a growing and legitimate debate about whether the sheer scale of AI-related investment is starting to crowd out other forms of capital expenditure, and whether the financing structures underpinning that buildout can support the free cash flow gap over time. If that debate starts showing up in guidance or financing costs, he said, it will force a rotation, not a broad AI selloff, but capital moving away from pure infrastructure plays toward names with nearer-term monetization.
Despite their different views on the biggest danger facing markets, the six investors were united on the response: diversify. With equities and government bonds swinging sharply this year, and winners rotating unpredictably, they argued that breadth is the best defense. Whether the concern is concentration, interest rate policy, AI spending or geopolitical shocks, the message was consistent: don’t anchor a portfolio too tightly to the trades that have already worked.
