In fast‑moving financial markets, having a disciplined approach to managing risk is essential. Here at Copia we use a range of quantitative and qualitative tools to help guide portfolio decisions. One of the most important of these is our Risk Barometer; a structured, data‑driven indicator designed to help us assess fundamental market conditions and adjust equity exposure accordingly.

The Risk Barometer is not a black‑box model, nor does it replace the experience and judgement of our portfolio managers. Instead, it provides an easy‑to‑interpret score that helps inform how much equity risk we take on relative to each client’s Strategic Asset Allocation (SAA). Its core purpose is simple: help protect portfolios from more significant losses during periods of market stress, while allowing us to maintain appropriate levels of risk when conditions are supportive.

A Clear Pulse Check on Market Conditions

The Risk Barometer produces a score between –1% and +1%. Although the output is easy to follow, it is built from a thoughtful assessment of global market behaviour. The tool looks across three major areas, namely equities, sovereign debt, and credit, to capture a broad picture of financial conditions.

The largest input comes from the equity component, driving 60% of the reading, which analyses a diversified universe of global exchange‑traded funds. By looking at both long and short‑term market trends, it helps us understand whether equities are broadly gaining momentum or showing signs of strain.

Sovereign debt markets, making up 20% of the score, tell us something about the economic environment. When government bond yield curves invert, meaning shorter‑term yields rise above longer‑term ones, it has historically pointed to slower economic growth ahead.

The final component, credit markets, offer insight into corporate health. Rising credit default swap spreads often reflect rising concern about company balance sheets, and therefore greater overall financial stress.

Bringing these components together gives us a well‑rounded perspective on market dynamics that is grounded in observable data rather than subjective interpretation.

From Signal to Action: What the Score Means for Portfolios

While the Risk Barometer does not dictate specific trades, it helps determine the appropriate level of equity exposure at different points in the market cycle. To keep things intuitive, the score places market conditions into one of three zones:

• Green, where markets appear healthy and portfolios are positioned to maximise equity allocation within the ranges of the SAA.
• Amber, where caution is appropriate and equity exposure is shifted to a neutral allocation.
• Red, where conditions look more fragile and risks are scaled back to the bottom of their ranges.

This “brake and double‑brake” framework gives clients confidence that portfolios will not remain heavily exposed to equity market risk during times of rising fundamental financial stress. Conversely, it ensures we remain invested, and do not de‑risk too early when conditions are more supportive.

In the current geo-political and investment landscape where uncertainty is a constant, the Risk Barometer provides a clear, data‑driven assessment of underlying market conditions and helps us adjust equity exposure in a measured and transparent way. Its strength lies not in predicting the future, but in supporting better decisions, particularly when markets become difficult.

The Risk Barometer has become a fundamental part of how we deliver long‑term and risk‑aware investment outcomes. For clients, this means their portfolios are better prepared for turbulent periods, while still positioned to benefit when conditions improve.

This article is intended for regulated financial advisers and investment professionals only. Copia does not provide financial advice. This information is not intended as financial advice and should not be interpreted as such. Remember, the value of investments will fluctuate, and capital is at risk.

Want to find out more?

Angus and the team update the Risk Barometer at the end of every month, you can check the latest reading here. 

If you’d like to find out more about how our tools and services can help you and your clients, send us a message or call 020 4599 6475.

The ongoing situation in Iran has created a new wave of uncertainty for investors. One notable feature of the conflict has been the sheer volume of information being released, which has the potential to shift markets in the short term. History suggests that trying to time markets during periods of volatility is rarely a reliable strategy.

In many ways, the situation in Iran represents a concentrated example of the current trading landscape in which volatility should be anticipated. We’ve seen increasingly frequent instances of instability over the past couple of years, largely driven by geopolitical friction.

Investing during conflicts and instability ultimately requires a well-considered strategy. Looking at both current developments and past events suggests that investors who focus on the broader economic and market picture are generally better positioned to navigate volatility.

The question marks around Iran

There are several aspects of the current conflict that differ from previous military action involving Iran. Rhetoric from the Trump administration has implied the possibility of an extended engagement. The situation remains highly uncertain, but market reaction so far has seen most major indices experience short-term declines.

The impact on oil is most closely watched, with the price of Brent crude moving above $100 for the first time in four years.[1] Iran has been targeting energy and civilian infrastructure in neighbouring Gulf states and limited passage through the Strait of Hormuz, a key global supply route.

Disruption in this area has clear implications for energy prices and inflation. Markets have already reduced expectations for future interest rate cuts.[2] To date, economies most dependent on energy imports have experienced the greatest market stress.

It’s worth noting that we’re yet to reach the market declines seen during previous periods of volatility, including the Liberation Day sell-off. However, even if the current conflict is resolved relatively quickly, several potentially disruptive elements remain, including US tariff policy and concerns around valuations in parts of the technology sector. Investment strategies need to take account of these ongoing risks.  

Peter Wasko, Senior Portfolio  Manager

Our innovative retirement portfolios, Copia Select: Retirement Income (RI) and Copia Select: Retirement Income Plus (RI+) have passed their third anniversary. Launched on 28 February 2023, the portfolios are designed to address the needs of investors in decumulation and delivering sustainable income through different market conditions.

Designed for the realities of retirement

RI and RI+ were purpose-built to support advisers in delivering good outcomes to clients at or in retirement and meet the evolving regulatory expectations around delivering a sustainable income in retirement.

The portfolios recognise the need to take a distinct approach to investing for decumulation versus accumulation. They aim to maximise returns for investors while mitigating the specific risks associated with taking an income from investments.

The RI portfolios balance capital growth potential with the need for stability and income sustainability. The portfolios follow a similar quantitative methodology to our highly successful accumulation models, but a greater proportion is allocated to less traditional assets, such as hedge funds, infrastructure, real estate and commodities, which provide a diversified alternative exposure. These assets typically have lower correlation to equity and fixed income, helping to reduce the impact of unfavourable market conditions on investors taking an income.

The RI+ portfolios are designed to complement guaranteed income, delivered by Just Group’s Secure Lifetime Income, alongside a managed portfolio to increase the opportunity to outperform and provide greater certainty of outcome in retirement without increasing the overall investment risk. Using a guaranteed income asset alongside a managed portfolio helps optimise asset allocation in retirement income portfolios, while achieving more certainty over investment outcomes.

First published in WealthWise on 3 February 2026

First published in WealthDFM on 21 January 2026

The year started not with a whimper, but with a bang. On 3 January, Donald Trump ordered and successfully carried out a military strike in Venezuela, resulting in the ‘extraction’ of its President, Nicolás Maduro. The action has many layers and, while it’s too early to gauge the full impact on markets, the initial reaction has been muted.

However, the operation highlights several themes likely to shape markets and geopolitics in 2026 and beyond. It already signals factors investors will need to monitor closely, from implications for oil and US domestic politics, to the evolving ‘Donroe’ Doctrine.

The Oil Dimension

Trump has made no secret of his interest in Venezuela’s oil. While restoring democracy in Caracas and addressing concerns surrounding Maduro’s involvement in narcotics and weapons were cited as key reasons for the intervention, the prospect of US oil companies returning to the region has become a central narrative.

Initially, major oil companies saw rises in share prices. However, within a week, gains returned to just above pre-operation levels. Big oil has been largely absent in Venezuela since the industry was nationalised fifty years ago. Maduro’s predecessor Hugo Chavez, forced any remaining international firms to cede control of operations to the state-owned PDVSA in 2007, sparking an array of legal battles and the departure of all firms except Chevron. The market quickly recognised that the infrastructure remains largely unchanged since the US left. There may be significant reserves but tapping them will require considerable investment.  

Production has fallen from a peak of three million barrels a day in 1998 to under one million today.[1] Rystad Energy estimates that $110bn in capital expenditure will be needed to produce two million barrels a day – twice what US oil giants invested globally in 2024.[2] In other words, progress is unlikely to be fast. ExxonMobil Chief Executive Darren Woods appeared to confirm this view, suggesting Venezuela is “uninvestable” without “significant changes”.[3]

The ‘Donroe’ Doctrine

Beyond oil, the operation also appears to benefit the Trump administration’s broader geopolitical ambitions, known as the ‘Donroe’ Doctrine. This is a reference to the Monroe Doctrine of the early 19^th century, reflecting a desire for US dominance across the Western Hemisphere.

The extraction of Maduro and seizure of Venezuelan oil assets have significantly weakened Cuba’s position, which relied on cheap Venezuelan oil. In addition, Cuba’s security service, tasked with protecting Maduro, was directly affected by the strike, with 32 Cuban guards reportedly killed during the operation.

The move also strengthens US leverage over China, Iran and Russia, all of which had invested in Venezuela and benefitted from diplomatic ties. Trump may see any increased pressure on China as particularly advantageous. China has been one of the few countries to resist US tariffs with relative success, by using their rare earth minerals as leverage, and any disruption to their oil imports could undermine that position.

Meanwhile, developments on Greenland, while still unfolding, suggest that US strategic considerations extend beyond Latin America. Venezuela appears to be part of a broader repositioning of America’s foreign policy priorities, which will be important to watch in the coming months.

Looking towards the midterms

Despite legal questions surrounding the Venezuela operation, some may view it as a shrewd manoeuvre for Trump’s domestic audience. Venezuela’s authoritarian regime displaced nearly eight million people[4] with many ending up in the US. A meaningful proportion of Venezuelan and Cuban voters in Florida, a critical swing state, appear to be largely supportive of the move.

These voters will be important in the midterm elections. Even if Congress challenges the operation’s legality or seeks to limit further actions, Trump may have gained favour with an influential section of the Hispanic electorate.

It’s also worth noting that, although Venezuela’s oil infrastructure is in poor condition, many US refineries are geared towards similar heavy crude. Any eventual increase in Venezuelan output could benefit US refineries, offering important political currency.

Keeping eyes open

The key takeaway from the 3 January intervention is that the situation remains fluid. Currently, markets appear relaxed, but confidence could easily be gained or shaken depending on how much uncertainty – the enemy of investing – enters the picture.

That said, most regional markets remain encouraging. Our Risk Barometer, which measures an array of relevant data points for market health, currently sits in the green.

Anyone hoping for a quiet start to the year will be disappointed. But if nothing else, recent events ensure that we will be keeping our eyes firmly on what comes next.

Richard Warne, Senior Portfolio Manager, Copia Capital

US midterms and market implications

With President Trump facing midterm elections in November next year, 2026 is likely to be marked by ongoing uncertainty. Measures to stimulate the economy ahead of the vote are already being discussed. These include fresh tax cuts and more deregulation, with parachute payments direct to households also under consideration. This noise will likely intensify as the year progresses.

Markets had previously priced in a series of interest rate cuts throughout 2026. However, stronger-than-expected growth figures and delayed inflation data have reduced the likelihood of a recession, and the probability of aggressive interest rate easing has declined. Potential friction may emerge if the White House pushes for rate cuts that aren’t supported by economic data. This could be a decisive challenge for the new Federal Reserve Chair who will succeed Jerome Powell in May 2026.

From a market perspective, US equities could benefit from stimulus measures, potentially supporting earnings growth and investor confidence, although this typically takes six to nine months to filter through to the real economy. Yet valuations are already trading well above long-term averages, even excluding big tech and AI names. It’s a valid question as to how much further upside stimulus can deliver.

Looking ahead, two scenarios seem most likely. The wave of AI-driven investment continues, with expected revenues eventually materialising to support sectors such as energy, chips, industrials and infrastructure. Or, valuations are tested, confidence wavers and capital potentially rotates towards more traditional areas like small-caps, cyclicals, and other less glamorously perceived parts of the market.

Global opportunities

Against this backdrop, opportunities outside the US, in regions and sectors with more modest valuations and ongoing structural change, are increasingly compelling. In Japan, corporate reforms are making small and mid-cap stocks increasingly attractive. Across emerging markets and Asia more broadly, economies already adjusting to dollar fluctuations offer real potential. Europe is entering a significant phase of infrastructure and energy-transition spending, and even modest deregulation could boost productivity. Closer to home, the UK remains uncertain, but valuations are appealing. Unlike the US, the UK economy is concentrated in traditional sectors like banks, mining and industrials. For investors that are brave enough there is particular valuation attractions in the small and mid-cap part of the market, and in stocks that are more UK domestically orientated.

Beyond equities, macro contradictions make fixed income challenging. Solid growth and persistent inflation, combined with rising energy and commodity demand, could reinforce price pressures. Long-duration bonds may remain vulnerable to policy shifts and volatility, whereas high-quality, short-duration credit may offer more stable, lower-risk income opportunities for clients without excessive interest-rate sensitivity.

Commodity markets also present interesting themes. Industrial metals could benefit from infrastructure investment and AI-related demand. Similarly, energy providers may gain from expanding data centres and AI infrastructure. While not a growth engine, gold continues to offer a hedge against a weaker dollar and policy uncertainty.

Finally, property offers selective opportunities for 2026, particularly in the UK. Ongoing merger and acquisition activity in the UK real estate markets suggests pockets of value for investors.

Selective optimism

The bottom line for 2026 is selective optimism. Policy stimulus, solid growth and pockets of value offer genuine opportunities, but they will not be evenly distributed. The most compelling theme for investors continues to be diversification: broad global equity exposure – with a focus outside the US – value and cyclical sectors, small- and mid-caps, disciplined fixed income allocations, and selective exposure to commodities or infrastructure.

Success in 2026 will depend less on picking a single winner and more on building a resilient, well-balanced portfolio that can adapt over the next 12 to 24 months. Volatility is likely to remain, but with a clear approach, 2026 could be a year that rewards patience, discipline and diversified thinking.

Pete Wasko, Senior Portfolio Manager, Copia Capital

Donald Trump’s return to the White House was always likely to create uncertainty. His re-election alongside a host of economic and geopolitical factors contributed to a changeable trading environment.

Nevertheless, despite pockets of volatility, most major asset classes have performed well. For us, it’s been a year where narrative-driven investing, prudent protection and thoughtful diversification have all played a role in delivering strong performances across our portfolio range. Long-term strategies have borne fruit, considered exposure has provided healthy returns and we’ve structured our portfolios to help manage the challenges. Here are some of my reflections on the market and our performance during 2025.

Lower risk strategies

At the lower end of the risk spectrum, we continued to prioritise protection in a year when volatility often flared up. Maintaining a bias towards short-dated investment-grade bonds proved valuable in navigating sticky inflation and ongoing uncertainty surrounding interest rates.

Over the past 18 months, we have gradually built exposure to government bonds, primarily gilts and treasuries, taking a measured approach given ongoing fluctuations in these markets driven by international and domestic political developments. Despite this volatility, yields have eased, particularly in 10- and 30-year maturities.

Asset-backed securities have also proved useful. Their stability and mid- to high-single-digit returns made them a reliable tool for supporting lower-risk portfolios.

Richard Warne, Senior Portfolio Manager, Copia Capital

Our Short-Dated Bond Portfolio (SDBP) has just passed its three-year anniversary. Looking back on performance, the team and I are very proud that it’s delivered on our core objective to provide steady and better-than-cash returns with low levels of risk and volatility.

Quick recap on the structure

The portfolio is constructed of short-dated investment grade bonds. It’s widely diversified with over 1,400 underlying holdings. Its core of short-duration investment grade corporate and UK government bonds is backed up by a satellite of high yield asset backed securities (ABSs) and emerging market debt. We’ve used a low duration strategy to ensure less sensitivity and movement in response to interest rate expectations.

You can see in the table below that over the three-year period it’s not been a smooth ride for the broader bond market. The UK Government Bond (Gilts) Index reached a maximum drawdown level (the difference between the index’s peak and its bottom point aka the largest loss an investor might have endured) of -8.4% during this time frame. Our SDBP’s maximum drawdown was significantly lower at just -1.1%.

Richard Warne, Senior Portfolio Manager, Copia Capital

In Q3 we saw regional markets put in more of the strong performance. A quick glance at market Q3 performances: MSCI Emerging Markets is up around 12.5%, Asia (ex. Japan) up over 12.5%, Japan (TSE TOPIX) above 10%. The US had a strong quarter, though on a year-to-date basis is languishing behind all major developed markets.

For the last few years, the US and big tech have been the only games in town but no longer. Anyone with more diversified exposure should have felt – and will likely continue to feel – the benefit of this diversification, particularly if we see any valuation corrections or bubbles bursting.

Checking in on North America

In many ways, it’s difficult to discuss current trading conditions without mentioning Donald Trump. I think we can break down the effects he’s had into four areas:

• Election Euphoria – markets initially excited at the prospect of tax cuts and deregulation
• Liberation Day – there’s a shock as tariffs are implemented quicker and more severely and randomly attributed than anticipated
• TACO – markets begin to expect high tariffs are a bargaining strategy and become more confident that these will be rolled back or implemented at lower rates, or Trump always chickens out
• China – currently the US and China joust over rare earths and AI technology.

 

The story, so far, has been better than expected. If Trump and XI Jinping can come to terms, then it’s likely markets will take a lot of heart from the two biggest adversaries in global trade averting actions that jeopardises supply chains. In corporate America, earnings and performances have remained surprisingly resilient. GDP has also been strong, with the economy in decent shape, contrary to expectation.

There are some caveats. The US market is still expensive and concentrated amongst tech giants who are heavily tied into the AI bubble and many companies are burning through cash while seeing negative revenues.

Coming up, Trump may try and return to his ‘Election Euphoria’ with a view to the midterms next year by focusing on tax cuts, deregulation and trying to tackle the growing American “affordability” crisis. However, there are concerns surrounding his influence over the Federal Reserve. It’s no secret Trump dislikes that the Fed hasn’t cut rates to his preferred timescales. He selected an ally to join the Fed in September and it’s noteworthy the market is pricing in several consecutive rate cuts. Usually you’d only expect to see this during a recession, which could indicate the market anticipates political pressure on the reserve.

Asia: China, Japan and the rise of EM

China is soaring ahead in terms of innovation and appears to have anticipated and dealt with Trump largely well. Deal or no deal, it’s reasonable to expect further points of tension with China during Trump’s term considering it directly competes with the US in AI, tech, auto and manufacturing. However, China holds a significant bargaining chip with its international monopoly on rare earths.

Japan has emerged through years of corporate sluggishness, deflation and weak growth having implemented reforms that mean companies are running much slimmer and sharper. We think the corporate change story remains firmly intact and is probably encapsulated in the appointment of the country’s first female Prime Minister (Sanae Takaichi). Her focus on corporate reform, fiscal and monetary spending and deregulation provides further tailwinds for the Japanese stock market.

Emerging market’s shining performance this year has largely come off the back of a weaker dollar, with valuations remaining competitive despite gains in the dollar. Considering Trump keeps talking up policies that will keep the dollar weaker, Emerging markets could have higher to climb if they continue to play an important role in supply chains amidst a tariff-stricken world.

Europe ticks along and UK searching for retail investment

Europe has continued to blossom this year, buffeted by tame inflation, allowing the European Central Bank to cut rates quicker and deeper. The Bloc has also come through a period of austerity and stringent regulation, benefiting from stimulus and proactive policy. Corporate Europe has followed suit and increased shareholder friendly policies such as share buybacks and dividends.

The UK has shown remarkable resilience and indicated it can provide good opportunities. Institutional investors have put their money into UK equity, domestically orientated small- and mid-caps have been boosted by interest rate cuts, defence spending stimulus and the stock market has begun to overcome its IPO issues with listings ticking up. A further boost could come from abolishing stamp duty on shares of newly listed UK companies. Much of the UK population hold capital in cash savings and if the chancellor’s decision to cut Cash ISA limits can encourage more retail investing it could be a boost for the equity market and the consumer.

The new normal

There are drivers in place that focus the spotlight on regions that until very recently have been out of favour. Those who have been discerning and diversified in their regional exposure have reaped the rewards. It should also stand them in good stead if we see a couple of valuation corrections in any market bubbles.

Our risk barometer, which incorporates several data points of market health, is at +0.45 indicating reasonable optimism. There are potential headwinds but using regional exposure and fixed income options to derisk portfolios could provide insulation from volatility.

This article is intended for regulated financial advisers and investment professionals only. Copia does not provide financial advice. This information is not intended as financial advice and should not be interpreted as such.

Richard Warne, Senior Portfolio Manager, Copia Capital