Our Chief Investment Officer at RISE, Duane Gilbert, emphasizes the importance of regularly updating our investors about global events that could affect their investments. Given the recent escalation of the Israel-Palestine conflict, it's crucial that we stay vigilant and concerned.
In terms of performance, EasyRetire portfolios have not been meaningfully impacted by the war. While it's true that conflict in any region is detrimental to global investment markets, the reasons why the 2023 Israel-Palestine war has not significantly affected our portfolio are as follows:
- The portfolios do not have direct exposure to the Israel or the Middle East.
- Neither Israel nor the besieged Gaza Strip are major economies, nor do they meaningfully contribute to global trade. In particular, neither region are significant oil producers.
- The war has not caused a meaningful “emerging market panic” or “risk-off” that would otherwise weaken emerging market currencies.
That said, we are not blind to possibility that the conflict will escalate. We see three possible scenarios playing out over the next 12 months:
- Scenario 1 – War is limited to Israel and Gaza/Hamas only.
- Scenario 2 – War escalates to include Hezbollah and other militant groups in Lebanon and Syria. Iran would unofficially support these militant groups.
- Scenario 3 - War escalates to include Iran officially. High likelihood of oil supply disruptions. High likelihood of some type of US involvement to keep the oil flowing. Oil prices have already risen, pricing in a modest probability of scenario 3 playing out.
We believe that RISE EasyRetire portfolios are well positioned for all 3 scenarios. The portfolios are conservatively positioned, with a high exposure to US treasuries and US dollar assets. These asset classes are the natural beneficiaries of a “risk-off” environment. We are not positive on gold as a hedge given its current price, and its sensitivity to high interest rates and a strong dollar.
Want to know more about the latest news?