Justin Onuekwusi advocates resilient portfolio strategies amid market volatility

Justin Onuekwusi has urged investors to think less about predicting the next shock and more about building portfolios that can absorb it.

Speaking at Spear’s 500 Live at The Savoy in London on 6 May, the chief investment officer at St. James’s Place said markets remain vulnerable to a long list of pressures, from war and inflation to recession risk, political instability and the impact of artificial intelligence. His view was that geopolitics may remain impossible to call, but portfolios can still be structured to withstand the turbulence.

St. James’s Place, which manages about £220 billion, is currently assigning only a 5 per cent chance to a deep recession over the next 12 to 18 months. Its central expectation is a soft landing, with Onuekwusi saying the present backdrop of relatively firm growth provides something of a buffer. A severe downturn, he argued, would probably require a much larger external shock than those already visible.

That cautious optimism sits alongside a clear warning: late-cycle markets are often volatile, and attempts to respond hastily to sharp swings can do lasting damage. Onuekwusi, whose career has included senior roles at Legal & General Investment Management, Aviva Investors, Merrill Lynch/Bank of America and Aon Consulting, said the current phase of the cycle can extend for years but rarely unfolds quietly.

He also pointed to what he described as a new political era, marked by growing strain on institutions built after the Second World War, including the UN, WTO and EU. In his telling, investors should expect uncertainty to remain a permanent feature rather than a temporary interruption.

The answer, he said, is diversification grounded in a clearer reading of the risks that move markets.

Government bonds, in his view, are still too lightly held by many investors after the sell-off in global fixed income in 2022. But he argued that protection should not be sought by concentrating in one market. Instead, portfolios should be spread across different sovereign issuers so they are not exposed to the fiscal choices of a single government.

Inflation poses another threat. Onuekwusi described it as especially damaging for multi-asset investors, particularly when it rises at the same time as growth weakens. He said inflation-linked securities, including US Treasury inflation-protected securities, can help offset that pressure.

Currency exposure, he added, is often overlooked. Sterling strength or weakness can have a material effect on returns, and foreign exchange can be a meaningful source of diversification in its own right. He cited the Japanese yen as an example of a currency that has offered useful balance over long periods.

Onuekwusi also challenged the idea that geopolitical crises automatically lead to lasting market damage. Looking back at major shocks since 1940, St. James’s Place found that the immediate reaction in US equities was usually weak, but that returns tended to recover over the following six to 12 months. The message, he said, is that short-term fear often exaggerates the long-term impact.

That broader outlook is consistent with St. James’s Place’s more recent positioning. In October 2025, the firm kept a defensive stance, underweighting US equities because of expensive valuations and concentration risks while showing more interest in the UK, Europe and emerging markets. In earlier commentary this year, Onuekwusi repeatedly stressed that investors should resist the temptation to trade on headlines or emotion.

His final point was that economics is only one input into portfolio construction. Investor sentiment, valuations, fundamental trends and tail risks all matter as well. Among them, he said, valuations remain the anchor: cheaper assets tend to offer better risk-adjusted returns over time, while expensive ones can leave investors exposed when conditions turn.