End of “peace dividend” and rise of great power competition are forcing investors to rethink portfolios
NEW YORK–(BUSINESS WIRE)–The Global Market Strategy team at New York Life Investment Management, today released their annual geopolitical risk report for 2026, “Geopolitical risk in a shifting world order,” finding that a fundamental transformation in the global system is reshaping markets and challenging how investors build portfolios.
The report argues that geopolitics is no longer a periodic source of volatility, but a structural force driving economic outcomes, market behavior, and asset allocation decisions. As the era of U.S.-led globalization gives way to one defined by great power competition, economic nationalism, and strategic state intervention, investors are operating in a world where the old playbook no longer applies.
“The resurgence of great power politics is reshaping the relationship between geopolitics and economies,” said Michael LoGalbo, Global Market Strategist, New York Life Investment Management. “For investors, the message is clear: yesterday’s tools won’t manage today’s risks.”
A new market regime driven by geopolitics
The report finds that the relatively stable, low-geopolitical-risk environment of the 2010s, often referred to as the “peace dividend,” has come to an end. In its place is a more fragmented and competitive global system, where geopolitical shocks are more frequent and more likely to have lasting economic consequences.
Rather than isolated events, geopolitical developments are increasingly driving long-term market realignments, with government policy across trade, industrial strategy, and national security playing a larger role in shaping market outcomes.
Chokepoints and constant risk
As global competition intensifies, the report highlights the rising importance of economic and financial “chokepoints,” critical nodes in systems such as payments, shipping routes, technology supply chains, and energy flows. Disruptions in these areas can cascade across markets and trigger outsized volatility.
At the same time, geopolitical risk can no longer be treated as episodic. It has become a persistent feature of the investment landscape, requiring more deliberate integration into portfolio construction and risk management.
Rethinking portfolios for a new era
To navigate this shift, the report points to evolving approaches to portfolio construction, including greater emphasis on resilience, diversification, and assets that may respond differently to geopolitical shocks. It also introduces a “macro volatility” portfolio framework designed to help investors navigate periods of heightened geopolitical stress and capture how shocks transmit through markets.
The full report is available for download here. For more insights on global markets, please visit our website.
About New York Life Investment Management
With approximately $807.7 billion1 in assets under management as of Dec. 31, 2025, New York Life Investment Management is a Pensions & Investments’ Top 30 Largest Money Manager2 and one of the largest active asset managers globally, with leading positions across both public and private markets. Comprised of the affiliated global asset management businesses of New York Life Insurance Company, New York Life Investment Management is committed to achieving enduring financial outcomes and building long-term partnerships across market cycles and generations. Our specialized, independent investment teams bring disciplined active management and deep expertise to help clients navigate the next era of investing.
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1Assets under management (AUM) includes assets of the investment advisers that make up “New York Life Investment Management” as of Dec. 31, 2025. AUM includes certain assets, such as non-discretionary AUM, external fund selection, and overlay services, including ESG screening services, advisory consulting services, white labeling services, and model portfolio delivery services, that are not necessarily considered Regulatory Assets Under Management according to the SEC’s Form ADV. AUM is reported in USD. AUM not denominated in USD is converted at the spot rate as of Dec. 31, 2025. The total AUM figure of “New York Life Investment Management” is less than the sum of the AUM of each affiliated investment adviser in the group because it does not count AUM where the same assets can be counted by more than one affiliated investment adviser.
2New York Life Investment Management ranked 28th largest institutional investment manager in Pensions & Investments’ Largest Money Managers 2025 published June 2025, based on worldwide institutional AUM as of Dec. 31, 2024. No direct or indirect compensation was paid for the creation and distribution of this ranking.
Important disclosures
This material represents an assessment of the market environment as of a specific date and is subject to change; and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any investment product or any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective. This material contains general information only and does not take into account an individual’s financial circumstances. This information should not be relied upon as a primary basis for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial advisor before making an investment decision. Prospective investors should be aware that investments in private funds or alternative investment strategies are suitable only qualified investors who do not require liquidity and who can bear the economic risk, including the potential for a complete loss, of their investment
Contacts
Media Contact:
Sara Guenoun | New York Life | 212-576-4757 | [email protected]
