By Jules Rimmer
Berenberg strategists say they don't have any allocation to bonds
Berenberg sees reindustrialization, the rise of hard-power politics and the need for more energy extending the commodity supercycle.
A clear agreement between U.S. President Donald Trump and Chinese President Xi Jinping next month could provide the energy for stocks to extend their strong run, say strategists who advise an unusual asset allocation that excludes bonds altogether.
The approach, laid out by U.K.-based strategists for the German bank Berenberg in a new research report, call for a barbell approach to portfolio allocation, balancing high- and low-risk assets, with an outsized weighting of 45% in what the team calls &#34;gold plus,&#34; incorporating gold (GC00), silver (SI00), other precious metals and bitcoin (BTCUSD), and 20% in commodities.
The remaining 35% is focused on equities.
Lead strategist Jonathan Stubbs told MarketWatch that Berenberg run their asset allocation framework strategically, rather than tactically, meaning they only make very occasional changes. Since 2020, they've advocated an equity-gold barbell because they're considered gold to be &#34;a far better and more appropriate hedge than bonds.&#34;
So Berenberg's asset allocation has &#34;zero exposure&#34; to bonds; understandable in the context of its views on high sovereign debt levels, fiat debasement and the risk of higher-for-longer inflation. Stubbs believes his recommended exposure to gold in the last five years has consistently been the highest among asset allocators.
The themes determining the Berenberg strategy are essentially three macro pillars: geopolitical disruption (featuring Sino-American hegemonic confrontation and deglobalization); fiscal dominance (fiat currency debasement, financial repression, national power); and higher for longer (meaning inflation, long rates, commodity prices).
Company mentions of &#34;geopolitics&#34; and total value of negative yielding bonds in trillions. The era of ZIRP has ended
This combination of factors has created a macroeconomic outlook that Berenberg describes as &#34;soft and flat&#34; with a clear risk of stagflation given the demand headwinds and supply disruptions associated with the Iran war. Despite the weaker forecasts, though, a recession is not the base case assumption.
Considering the macro outlook, Berenberg favors the global rebalancing trade in stocks, so leaning into international equities VXUS at the expense of the U.S. SPX This conviction is reinforced by the extended period of dollar DXY weakness the analysts anticipate. They've demonstrated an international bias to portfolio composition since the end of 2024 but given markets have run quite hard in the last month or so, the team confesses they &#34;see equities as hard to chase near term.&#34;
Identifying the sectors most likely to benefit from their thematic approach, Berenberg has fixed on utilities and telecoms as its &#34;whatever the weather&#34; winners, while it's been upping its exposure to commodities throughout 2026 so far. Stubbs and O'Malley recommend investors &#34;stay aligned with hard power industries to benefit from fiscal support and to hedge AI disruption.&#34; Their model highlights transition metals - like nickel, cobalt and copper (HG00) for example - AI and digital payments as the optimal themes to exploit.
Hard power, hard assets, hard money. Berenberg aligns its portfolio allocation with the dominant geopolitical themes.
Any strategy note written these days, however, must be heavily caveated owing to the unpredictability of what Berenberg calls &#34;The Trumpian Paradigm Shift.&#34; They list the 'Six Ps' of risks as politics, policy, prices, profit, people and pandemic. At the same time they also note possible black-swan event risks like crises caused by sovereign debt, food or fiat collapse.
-Jules Rimmer
This content was created by MarketWatch, which is operated by Dow Jones &amp; Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
04-22-26 0336ET

GBTC

Berenberg strategists recommend a portfolio allocation of 45% in gold, metals, and bitcoin, with zero exposure to bonds. They advocate a barbell strategy focusing on high- and low-risk assets, driven by geopolitical disruption, fiscal dominance, and prolonged inflation. The firm emphasizes international equities over U.S. stocks and highlights utilities and telecoms as resilient sectors. They caution about risks from political and economic uncertainties, including potential crises related to sovereign debt and fiat currency.

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