At the 8th Future Investment Initiative (FII) in Riyadh, Patrick Zhong, Founding Managing Partner of M31 Capital, participated in a panel on the role of alternative assets amid rising geoeconomic uncertainties. He reinforced that navigating market complexity requires a long-term vision in investment strategies. The future comprises a range of potential scenarios, a function. It is essential to identify the key drivers, as well as to evaluate their relative weights and the probabilities of their occurrence.

FII8 brought together world leaders, changemakers, and thought pioneers to develop tangible solutions. Key speakers included Mohammed Al-Jadaan, Minister of Finance of the Kingdom of Saudi Arabia; Elon Musk, CEO of Tesla and SpaceX; Stephen Schwarzman, Chairman and CEO of Blackstone Group; Masayoshi Son, Chairman and CEO of SoftBank Group; Yasir Al-Rumayyan, Governor of the Public Investment Fund; Laurence Fink, CEO of BlackRock.

The panel session, themed “Can Alternative Assets Still Buffer Portfolios During Geoeconomic Stress?” was moderated by Dina Powell McCormick, Vice Chairman and President at BDT & MSD Partners. It featured perspectives from investment leaders, including Scott Goodwin, CIO of Diameter Capital Partners; Bob Prince, Co-CIO of Bridgewater Associates; and Barry Sternlicht, Chairman & CEO of Starwood Capital Group. The discussion delved into alternative investments’ resilience and strategic potential, particularly as sources of diversification and stability in today’s volatile markets.

Navigating Market Complexity with a Long-Term Perspective

Patrick Zhong, Founding Managing Partner of M31 Capital, recognized that the complexities of today’s global landscape present significant challenges for many entrepreneurs to navigate. While many entrepreneurs possess deep expertise in specific sectors, identifying cross-industry trends that span global markets remains a considerable obstacle. Investors are expected to provide a more comprehensive and nuanced perspective, as entrepreneurs increasingly rely on their insights to maneuver through this rapidly changing environment.

Patrick believes that mastering the complexities of today’s market relies on two fundamental principles. The first is the importance of focusing on long-term trends rather than becoming distracted by current events. The market is currently influenced by a combination of geopolitical tensions, economic fluctuations, and rapid technological advancements, all of which can trigger sudden, short-term volatility. However, many investors and market participants often fixate on immediate events, thereby missing deeper, structural shifts that define the longer-term trajectory.

“Understanding these trends is not about predicting the future with absolute certainty,” Patrick explained. “It’s about evaluating a range of potential outcomes and crafting flexible strategies.” By identifying these underlying shifts, investors can better navigate market turbulence and position themselves in areas likely to experience sustainable growth.

The second critical approach, according to Patrick, is the ability to effectively filter and interpret information. In today’s digital age, the flood of information on social media can overwhelm individuals, often with fragmented, biased, or sensationalized content that distorts perspectives and creates echo chambers.

Patrick emphasized the importance of engaging directly with subject-matter experts, noting that true understanding comes from informed, in-depth discussions rather than passive consumption of media narratives.

“Identifying appealing investment opportunities is no easy task—they are rarely obvious,” he said. “In times of uncertainty, we must develop structurally innovative strategies that incorporate the right elements into our deals.”

U.S. Property Market Remains a Robust Investment Opportunity

Barry Sternlicht, Chairman and CEO of Starwood Capital Group, warned that the growing U.S. budget deficit poses a significant economic threat, with neither political party offering a clear solution. He called for zero-based budgeting, prioritizing areas like education to prepare the workforce for AI challenges.

(Credit: CNBC)

While acknowledging AI’s role in GDP growth, Sternlicht pointed to slow progress in sectors like infrastructure and healthcare. However, he remains optimistic about U.S. real estate, noting a 4 million housing unit shortage. With fewer new projects expected by 2026, he anticipates rising rents, which could drive inflation and create opportunities for property investors, particularly as interest rates remain low.

Private Credit: A Path to Long-Term Returns Amid Market Uncertainty

Scott Goodwin, Chief Investment Officer at Diameter Capital Partners, views private credit as a top sector within alternative investments despite risks from geopolitical volatility. Once invested, repositioning can be difficult.

(Credit: Bloomberg)

Goodwin noted that private credit still offers higher yields than public credit, though the gap is narrowing. He highlighted the U.S. election as a critical market factor, warning that one party gaining complete control could increase government spending and higher risks. He also cautioned about a potential “bear steepening” scenario, where long-term rates could rise to 5% or 6%, increasing hedging costs over the next 22 months.

Harnessing Liquidity for Flexible Portfolio Management

Bob Prince, Co-CIO at Bridgewater Associates, emphasized the importance of liquidity in portfolio management, especially during macroeconomic shifts. Liquid assets enable quick adjustments to changing market conditions.

He explained that a traditional 70/30 portfolio—70% liquid assets and 30% risk hedging—offers flexibility. For instance, investors may buy short bonds to protect against inflation or rising rates or long-term bonds to hedge against stock downturns.

By combining liquid markets with high-return assets, Prince believes investors can boost returns while maintaining resilience and adaptability in volatile markets.