Goldman Sachs Sees 4% Drawdown on $300T Portfolio, Recommends Defensive Strategies
Goldman Sachs says its Risk Appetite Indicator fell from above 1 earlier this year after shocks including oil price surges and Middle East conflict, driving its $300 trillion portfolio proxy down roughly $11 trillion (4%). The bank forecasts limited long-term bear market risk and recommends defensive equity and hedging strategies.
1. Risk Appetite Indicator Decline
Goldman Sachs’s Risk Appetite Indicator rose above 1 early this year before falling due to shocks including oil price surges and the Middle East conflict, signaling a pullback in investor confidence in multi-asset strategies.
2. $300 Trillion Portfolio Drawdown
The firm’s world portfolio proxy, encompassing about $300 trillion of global assets, has dropped by roughly $11 trillion, or 4%, since the onset of recent geopolitical and commodity price shocks.
3. Limited Bear Market Risk Outlook
Despite the pullback, Goldman Sachs views the drawdown as modest in a long-term context, expects energy prices to normalize from the second quarter, and advises adding defensive equity styles along with hedges such as equity puts, CDS payers and selective call structures.