Inflation that steadily erodes cash and market shocks that unsettle even experienced investors are reshaping how wealth portfolios must be built in 2026. Many clients are asking how they can protect capital when traditional diversification is under pressure and correlations no longer behave as expected.
At FundForum 2026, Charles‑Henry Monchau, CIO at Syz Group, explains how private wealth portfolios are adapting to today’s environment, why staying invested has been essential through recent periods of stress, and where credible sources of diversification are emerging as inflation and market volatility redefine risk.
Inflation and the erosion of cash
Inflation today is elevated and sticky, and Charles‑Henry notes that clients who stay in cash see their purchasing power steadily decline. The challenge is finding the balance between protecting capital and accepting enough risk to achieve real returns. He points to recent moments of market stress where clients were tempted to divest, yet staying invested proved essential.
Key points highlighted:
- Inflation erodes purchasing power for anyone holding cash
- Clients must accept some risk to achieve real returns
- Divesting during market shocks has repeatedly been the wrong move
- Staying invested has been critical in recent periods of stress
Why client patience is being tested
Recent drawdowns and geopolitical events triggered panic among wealth clients. Charles‑Henry highlights examples where investors feared deeper losses, yet the recovery that followed rewarded those who stayed invested. The challenge is maintaining discipline when headline risk dominates sentiment.
The shift away from traditional 60/40 portfolios
For a decade, low inflation and low nominal growth supported negative correlations between equities and bonds. That dynamic has changed. Correlations have moved higher, reducing the effectiveness of the 60/40 model. As a result, fixed income exposure has been progressively lowered to maintain an acceptable return to risk profile.
Where diversification is coming from
With sovereign debt playing a smaller role, diversification now comes from alternatives. Charles‑Henry points to hedge funds, which are having a stronger year, and commodities, which are returning to portfolios after a long period of underperformance. Gold, industrial metals and energy have all played useful roles in recent years.
Illiquid assets and long‑term growth
For clients who can accept lower liquidity, illiquid assets are increasingly important. Real estate, private debt, private equity and infrastructure offer long‑term return potential and help rebuild portfolio resilience. Charles‑Henry notes that the industry is adapting quickly, with new evergreen and LT fund structures offering regulated wrappers, lower entry tickets and more flexible exit options.
A financial industry adapting to new needs
The combination of inflation, shifting correlations and client behaviour is reshaping how wealth portfolios are built. The industry is responding with structures that make private markets more accessible while supporting the need for real returns in a challenging macro environment.
