For much of the past decade, markets operated under the assumption of central bank intervention during periods of stress. That assumption is increasingly being challenged. Higher inflation and fiscal constraints are limiting policymakers’ ability to stabilize markets.
At Provenance Global Exposure SICAV p.l.c. (“Provenance”), we continue to monitor these developments closely, ensuring that our funds are aligned with global opportunities that aim to support growth and stability.
Why this matters for investors
Reduced policy support changes how assets behave during drawdowns. Equities and bonds no longer move in reliably opposite directions, which weakens traditional diversification strategies.
The Provenance Funds volatility strategy helps investors adapt to this environment by prioritizing resilience, flexibility, and active risk management.
Structural forces at play
Several forces are redefining the sector:
- Persistent inflation pressure — limits aggressive monetary easing.
- Rising sovereign debt levels — constrain fiscal stimulus.
- Fragmented global growth — increases regional shocks.
These conditions resemble earlier market regimes where active risk management played a larger role.
Risks to portfolios
Portfolios built on low-volatility assumptions face sharper drawdowns. Liquidity can deteriorate quickly during market stress, especially in less transparent segments. The Provenance Funds volatility strategy actively positions portfolios to respond to these risks instead of reacting after volatility spikes.
Investment implications
Investors may need to reassess diversification tools, including real assets, alternatives and strategies designed to perform across volatility regimes rather than single economic outcomes.
🔹 Want to learn more? At Provenance Funds, we integrate these insights into diversified solutions. We emphasise structural themes that enhance resilience and long-term return potential.
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Provenance Global Exposure SICAV p.l.c. is licensed by the MFSA as a Maltese Undertaking for Collective Investment in Transferable Securities (UCITS) in terms of the Investment Services Act (Marketing of UCITS) Regulations (S.L. 370.18, Laws of Malta).
