ETMarkets NRI Talk: Stefan Hofer on why gold, euros & private markets may be NRI wealth shields

Time of India

05-05-2025

As global markets grapple with escalating trade tensions and policy unpredictability, Non-Resident Indians (NRIs) are increasingly looking for ways to safeguard their wealth from rising volatility.
In this edition of ETMarkets NRI Talk, Stefan Hofer, Chief Investment Strategist at LGT Private Banking Asia Pacific, outlines why traditional bets on the US dollar and equities may no longer offer the same safety net.
Instead, he highlights the strategic value of gold, the euro, and private markets as more resilient components of a globally diversified portfolio—especially in a world drifting toward multipolarity. Edited Excerpts –
Q) How might escalating trade tensions between major economies like the US and China affect the global investment landscape for NRIs?
A) With less than one month having passed since the launch of the new US tariff regime, investors do not have hard economic data on hand to gauge the expected drag on spending.
Sentiment surveys have been published, and these are uniformly negative, as well as expectations of inflation which have moved higher.
The other major new phenomenon is the broad weakening of the US dollar, in line with the alleged aims of the Trump Administration.
Q) In the wake of a tariff war, should NRIs consider reallocating part of their portfolio from global equities to safer fixed-income instruments or gold?
A) We advocate globally diversified portfolios as we rush towards a more multi-polar world. In terms of particular regions outside India, European assets and the Euro stand out a being potential longer-term beneficiaries as US exceptionalism fades.
Gold – even at current elevated levels – may be useful as a hedge against rising US inflation expectations.
For fixed income, we recommend predominantly high credit ratings and shorter duration instruments, given the highly uncertain rates outlook for the US Federal Reserve.
Q) What kind of
geographical diversification
strategies should NRIs adopt to hedge against the volatility caused by trade wars?
A) In addition to diversifying away from US equity exposure and the US dollar in general, more defensive strategies that lower the beta of an overall portfolio would make sense in the current environment.
This means considering market-neutral strategies and/or private market solutions, be it in private equity or credit.
Q) Could India benefit as a manufacturing alternative amid US-China trade tensions, and how can NRIs capitalize on this shift?
A) India is in pole position to expand its market share in global manufacturing exports, and anecdotal evidence (Apple assembling iPhones in India) suggests that important progress is being made in this area.
Over the longer term, for India to be on the cutting edge of manufacturing exports, then a further ramping up of logistics infrastructure is needed, namely seaports, highways, rail and airports, for example.
Q) Are wealth managers recommending any specific asset classes or geographies as a hedge against trade-related global market turbulence?
A) The policy-making environment is very volatile, and this is being expressed in asset prices around the world.
A well-diversified portfolio across geographies and currencies should help investors navigate the current turbulence.
Hedging strategies that protect the downside of a portfolio need to be carefully assessed from a cost-benefit perspective, as hedging costs can change quickly.