Supertrends to boost portfolios over the next five years

THE first five weeks of 2026 raced by like a movie set to fast-forward. It is timely to recap the key drivers for recent volatility in search of guideposts for the year ahead.

Investors have been caught in cross-currents of geopolitical uncertainties sparked by the US’ dramatic capture of former Venezuelan president Nicolas Maduro, followed by renewed interest in Greenland, propelling a rush into gold and precious metals.

The risk-off sentiment was exacerbated by US President Donald Trump’s appointment of Kevin Warsh to replace outgoing Federal Reserve chair Jerome Powell. Warsh’s reputation as a hawk on monetary policy has caused markets to recalibrate interest rate expectations.

The sharp retracement in equities, precious metals and currencies sparked cross-asset volatility.

CME Group, the world’s largest commodities exchange, posted a third consecutive increase in margin requirements this year for gold (9 per cent) and silver (18 per cent) futures contracts. This reflects rising volatility in the asset class, in which physical trading is complemented by institutional and retail traders who utilise leverage, options and derivatives.

Last week’s tech sell-off followed Anthropic’s release of its Claude Cowork tool. The agentic artificial intelligence (AI) assistant featured new plug-ins that cover marketing, finance and data analysis, which threaten to disrupt software service providers.

Fresh concerns about the AI monetisation potential arose after several hyperscalers announced higher-than-expected AI-related capital expenditure.

The ever-shifting geo-economic environment poses challenges for investors constructing robust long-term portfolios that can withstand the test of time. Viewed together with the emergence of game-changing technological innovations and demographic shifts, visibility over the next five years eludes even the most seasoned forecasters.

To guide our strategic framing as portfolio builders, our CIO Investment Institute, together with the CIO Global Advisory Council, has identified five key supertrends. These structural shifts are already rapidly unfolding and will continue to play out over the next five years.

1. New world order: Trading places

As a more fractured world emerges, coalitions and alliances will evolve over the rest of the decade based on common interests.

The contest for economic hegemony is playing out in fresh economic partnerships and trade deals between China and Canada, UK and South Africa inked so far this year. In the next five years, the US will confront its ambitions of balancing economic growth, affordability for its citizens and achieving technology prowess.

This presents the US administration and the Fed with a unique set of policy-setting dilemmas at a time when its own fiscal health and global hegemony are being strained at multiple fronts. The shift from a US-led order will result in elevated inflation expectations, a weaker US dollar, and demand for gold and safe-haven assets.

2. Whole portfolio resilience

The “whole portfolio approach” to building resilient investment portfolios using our robust asset allocation methodology fixes our focus on the north star of long-term risk-adjusted returns.

We advocate well-diversified and optimised portfolios that avoid severe drawdowns, whipsawed by the velocity of news flow and volatility of markets.

Within our tactical asset allocation, we remain risk-on with an overweight in equities. The long-term outlook for equities remains constructive with the tailwind of global growth, lower interest rates, AI-driven productivity gains and innovative business models.

However, with the increased near-term volatility, investors with concentrated or leveraged positions can consider hedging as risk management rather than a directional call on markets.

Even as the near-term volatility for precious metals continues with elevated risk of further margin calls and liquidations ahead, the long-term merit of holding gold as part of portfolio allocation remains broadly intact with supportive fundamentals, such as global central bank demand and US fiscal sustainability concerns.

3. AI’s quantum leap

As we enter the fourth year of bullish technology sector performance led by AI developments, AI monetisation will differentiate winners from losers as the pecking order within the sector evolves.

Beyond the AI infrastructure buildout, AI applications will take centre stage with agentic and physical AI broadening the investment landscape.

Among the segments, we favour infrastructure buildout beneficiaries such as selected hyperscalers, Internet and semiconductor players, such as wafer fabrication equipment, while maintaining caution on software leaders vulnerable to disruption by AI natives rolling out commercial applications.

4. Advantage Asia

Asia is transforming from the world’s factory floor into hubs for game-changing technology, backed by a dominant semiconductor supply chain, surging AI demand, proactive government support and a deep reservoir of scientific talent.

Taiwan and South Korea are deeply embedded in the global AI chip supply chain, while China’s stated AI ambition is to become “an intelligent economy and an intelligence society” by 2035, with AI adoption of over 90 per cent.

While North Asia accelerates growth in industrial automation, robotics and humanoid technology, South-east Asia will become embedded into the semiconductor supply chain with data centre developments in the coming years.

Asia’s mantle of sustainability leadership, at a time when other regions waver in their commitments, is also timely, as renewable energy and clean technology will fuel sustainable industries as climate realities materialise.

5. Live, play, love

All around the world, demographic changes will reshape lifestyles and consumer behaviour.

Countries face demographic dilemmas driven by longevity due to healthcare improvements and declining birth rates. The rising fiscal burden to support ageing populations poses macro challenges that will reshape the private insurance, wealth management, technology and healthcare sectors.

The next generation of digital natives and digital nomads will live, play and love in ways that challenge the prevailing demographic status quo in both developed and emerging markets. Ironically, this generation will likely bridge the geopolitical landscapes into borderless data ecosystems that present exciting utopias and cybersecurity risks.

Portfolio implications

Rather than react to short-term signals, developments should propel us to adjust our investment portfolios for longer-term outcomes.

Despite his reputation as a hawk, incoming Fed chair Warsh will likely advocate for rate cuts this year, though the path for the Fed funds rate beyond 2026 is less clear. OCBC Group Research maintains its base case for one cut of 25 basis points in 2026.

For equities, we expect near-term volatility to persist, but the dispersion in equity performance across regions, sectors and companies provides stock-picking opportunities for investors seeking alpha.

We maintain an overweight position expressed via a preference for Asia ex-Japan, especially Hong Kong, China, Singapore and Malaysia equities.

In fixed income, we maintain a neutral portfolio duration and prefer investment grade over high yield in developed markets. Within emerging markets, we favour Latin America on relatively attractive valuations, local central banks’ easing bias in monetary policy and potential election of market-friendly leaders in upcoming elections.

Overall, active risk management remains key in managing wealth portfolios. Diversifying across asset classes, regions, return drivers and style managers helps avoid over-reliance on any single forecast or risk factor.

Avoid concentration risks, excessive leverage and stay alert to dislocations and tactical opportunities through rigorous focus on the fundamentals of every investment.

The writer is global chief investment officer, Bank of Singapore