Key Takeaways
- • Stefan Hofer, Chief Investment Strategist at LGT Private Banking APAC, projects increased volatility across risk assets in 2026 driven by rising geopolitical tensions and macroeconomic uncertainty.
- • Investors should adopt a defensive posture while identifying specific sectors and strategies positioned to outperform in a more volatile environment.
- • Geopolitical risk elevation represents a material shift in the investment backdrop for 2026, requiring portfolio positioning adjustments away from complacency assumptions built into 2025 market pricing.
Summary
Stefan Hofer, Chief Investment Strategist at LGT Private Banking APAC, warned investors on January 15, 2026, that risk assets face a materially bumpier investment backdrop this year compared to recent market conditions. The strategist cited rising geopolitical risks as a primary driver of expected volatility, signaling that markets may face headwinds beyond traditional macroeconomic factors.
Hofer's outlook signals a shift away from the relatively benign risk environment that characterized much of recent years. The emphasis on geopolitical risk elevation suggests that institutional investors should reassess portfolio construction, particularly for positions that benefited from low-volatility assumptions. According to Hofer's analysis, 2026 presents a bifurcated opportunity set: defensive positioning will be warranted for core portfolio anchors, while tactical tilts toward specific outperforming sectors and strategies could generate alpha.
The strategist's framework indicates that investors who remain fully committed to risk-on positioning without hedging mechanisms or sector selectivity may face unnecessary drawdowns. Conversely, those who identify resilient sectors and employ volatility-aware strategies can potentially navigate the elevated risk environment effectively. The commentary underscores the importance of active management and dynamic repositioning throughout 2026, rather than static allocation models that presume stability.
Hofer's outlook signals a shift away from the relatively benign risk environment that characterized much of recent years. The emphasis on geopolitical risk elevation suggests that institutional investors should reassess portfolio construction, particularly for positions that benefited from low-volatility assumptions. According to Hofer's analysis, 2026 presents a bifurcated opportunity set: defensive positioning will be warranted for core portfolio anchors, while tactical tilts toward specific outperforming sectors and strategies could generate alpha.
The strategist's framework indicates that investors who remain fully committed to risk-on positioning without hedging mechanisms or sector selectivity may face unnecessary drawdowns. Conversely, those who identify resilient sectors and employ volatility-aware strategies can potentially navigate the elevated risk environment effectively. The commentary underscores the importance of active management and dynamic repositioning throughout 2026, rather than static allocation models that presume stability.
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