How should investors navigate event risk and find long-term opportunity in today’s market?

Political headlines are shaping more of today’s market behaviour, and the speed of sentiment swings has become a defining feature of this cycle. In this conversation from FundForum 2026, Luke Hyde Smith, Multi‑Asset Portfolio Manager at W1M, offers guidence for allocators navigating a politically influenced market environment. Luke gives his insights on:

• How investors can separate short-term noise from long-term fundamentals
• Why event risk has become central to portfolio construction
• Where alternatives are genuinely adding resilience at a time when traditional fixed income is less dependable

Short-term narratives and the rise of event risk

Luke describes a market increasingly driven by media cycles and political developments. He notes that short-term news flow often overwhelms underlying fundamentals, creating an environment where sentiment can shift rapidly. For W1M, the priority is separating this noise from the structural forces that matter over the long run. Luke argues that the dominance of political narratives can actually create attractive opportunities for investors who avoid reacting to every headline and maintain a disciplined, long-term approach.

Building multi-asset portfolios for a wide range of outcomes

When discussing multi-asset positioning, Luke emphasises the importance of constructing portfolios that can withstand different macroeconomic and political scenarios. He explains that W1M does not attempt to time political events or tilt exposures around fast-moving developments. Instead, the focus is on bottom-up resilience and allowing companies to deliver long-term returns. This approach is particularly relevant in a period where macro trends and geopolitics often pull in different directions, creating uncertainty that can tempt investors into overly defensive positioning.

Where alternatives add genuine resilience

Luke highlights the role of alternatives in strengthening portfolios when traditional fixed income is less reliable as either a defensive anchor or a return generator. He explains how real assets with inflation-linked cash flows can provide stability in higher inflation regimes, and how absolute-return strategies can protect in weaker equity markets while still delivering nominal returns when conditions improve. These areas help investors navigate a landscape where the traditional 60/40 model faces structural challenges.

A call for balanced risk-taking

Looking ahead, Luke encourages senior allocators and investment committees to balance caution with optimism. He notes that many investors in Europe and the UK have been positioned too defensively, missing opportunities that favour those willing to take measured risk and stay focused on fundamentals rather than political noise. Even with volatility and some areas that look overpriced, he believes strong opportunities remain for long-term investors who avoid being distracted by short-term sentiment and maintain a positively skewed approach to risk-taking.