How to Protect Your Portfolio from Geopolitical Shocks
May 23, 2025
Read Time 5 MIN
Geopolitical Risk: From Background Noise to Foreground Signal
Geopolitical risk encompasses events such as armed conflicts, government sanctions, regime changes, and diplomatic standoffs that can disrupt global markets. Historically considered background noise, these risks now sit front and center in investment decision-making.
As we move through the fiscal reckoning in the U.S., investors face a shifting macro environment shaped by spending cuts, tariffs, and recessionary pressures. Following years of stimulus and deficit spending, the U.S. is transitioning from a "two feet on the gas" economy to a more austere fiscal policy. The implications may be recessionary, with a potential rise in unemployment and pressure on corporate earnings. We're starting to see this reflected in forward guidance, or lack thereof, coming out in the Q2 earnings season.
The Top Geopolitical Risks Shaping Markets
The top geopolitical risks of 2025 are redefining investment playbooks:
- Escalating Global Conflicts and Instability: Armed conflicts across the mid-east and Eurasia have disrupted energy markets and initiated renewed pressure on global inflation.
- Rising Nationalism and Protectionism: The trend towards protectionist trade policies includes increasing trade barriers, tariffs, and disruptions to global trade. While U.S. tariffs may have de-escalated recently, expect materially higher tariff policies than the market has been accustomed to.
- Capital Flows and Currency Volatility: Significant shifts in capital flows with some investors potentially moving away from U.S. dollar-denominated assets, including those that have historically been considered safe havens during market turmoil. Capital seems to be flowing towards currencies and markets where policy may be more predictable per se.
How Geopolitical Risk Impacts Investment Performance
Geopolitical shocks can lead to immediate & intense market volatility swings and long-term economic shifts. For instance:
- Russia's invasion of Ukraine triggered a global energy realignment and commodity rally.
- Brexit reshaped Europe's financial services landscape.
- U.S.-China tariffs in 2018-2019 disrupted supply chains and forced revaluations across sectors.
Such events often result in capital flight, increased funding costs, and shifts in corporate investment strategies.
So, does geopolitical risk matter for corporate investment? Absolutely. It alters incentives, narrows planning horizons, and redirects capital towards jurisdictions that are perceived as safer or more stable.
And how does political risk affect foreign investment? It often causes institutional investors to reduce exposure, increase cash allocations, or reweight portfolios toward hard assets and geopolitically insulated markets.
The market activity we saw in early April exemplifies how this volatility rattles investors. U.S. equity markets saw extreme volatility triggered by newly announced tariffs under emergency economic powers. The sweeping policy changes led to a rapid selloff, driven by fears of global retaliation, supply chain disruptions, and economic fallout. Markets briefly stabilized after the White House paused most of the tariffs, leading to a dramatic rebound. However, investor sentiment remained fragile, with ongoing concerns about inflation, corporate earnings, and geopolitical uncertainty highlighting how quickly market mood can shift in response to policy developments.
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Strategies to Protect and Diversify Your Portfolio
While predicting every crisis is impossible, investors can adopt strategies to enhance portfolio resilience:
- Go Beyond the Conventional 60/40 Allocation: Investments in real assets, including gold and other commodities, often retain value or appreciate during global instability.
- David Schassler offers investors a guidebook of how to implement these strategies within a comprehensive asset allocation via the VanEck Wealth Builder Plus and Wealth Builder Core Portfolios.
- Investors looking to exclusively add real assets to their portfolio may also be intrigued by the VanEck Real Assets ETF (RAAX).
- Hedge with Scarce Assets: Gold's store-of-value properties allow it to remain a reliable hedge against geopolitical shocks. Bitcoin, while more volatile, is increasingly viewed as a potential store of value.
- The VanEck Merk Gold ETF (OUNZ) offers investors exposure to the spot price of gold and the unique option to take physical delivery of that exposure.
- The VanEck Bitcoin ETF (HODL) the most cost-effective product that offers exposure to the spot price of Bitcoin since VanEck has waved the entirety of the fee*.
- Diversify Geographically: Spread investments across multiple countries and regions to reduce centralized exposure to any single geopolitical event.
- VanEck emphasizes the importance of geographic diversification and has highlighted opportunities in markets like India for some time now due to the robust structural growth potential and macro tailwinds. To gain access, consider the VanEck Digital India ETF (DGIN) and VanEck India Growth Leaders ETF (GLIN).
At the top of the year, Jan van Eck urged investors to diversify their equity exposure and seek hedges for looming inflation risk. That guidance was reiterated in his Q2 outlook. The remainder of 2025 may bring additional volatility, potentially creating attractive entry or re-entry points for buyers of U.S. equities; however, even the best investors may find market timing challenging.
In the recent past, U.S. stocks have been the only place to outperform—largely attributed to the overweight large-cap tech stocks that have delivered tremendous returns and resilience. Is this the case going forward? If mean reversion tells us anything, probably not. This sentiment underscores the importance of global diversification.
How Smart Investors Stay Grounded During Geopolitical Shocks
Emotional responses to geopolitical events can lead to suboptimal investment decisions. History shows that investors who maintain discipline during turbulent times often achieve better long-term results. Periods of elevated uncertainty and market dislocation can create compelling entry points for long-term investors. Resisting the urge to react impulsively and remaining invested through cycles is one of the most effective ways to build long-term wealth.
One of my favorite quotes articulates that time in the market beats timing the market.
Time in the market beats timing the market.
Kenneth FisherConclusion: Preparing Your Portfolio for Volatility
Geopolitical risk is nothing new, but the convergence of trade disputes, military tensions, and pivotal elections in 2025 is testing investor resolve. Navigating these challenges requires a balanced perspective: protecting against downside risk while staying open to the opportunities volatility can bring. As Jan van Eck noted in his recent outlook,
Stay invested, but diversified—this is a process, not a moment.
Jan van EckTo receive more Model Portfolio insights, sign up in our subscription center.
DISCLOSURES
* During the period commencing on November 25, 2024 and ending on January 10, 2026, the Sponsor will waive the entire Sponsor Fee for the first $2.5 billion of the Trust’s assets. If the Trust’s assets exceed $2.5 billion prior to January 10, 2026, the Sponsor Fee charged on assets over $2.5 billion will be 0.20%. All investors will incur the same Sponsor Fee which is the weighted average of those fee rates. After January 10, 2026, the Sponsor Fee will be 0.20%. Brokerage fees and commissions may apply. Please check with your broker. Please refer to the press release for more information.
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
VanEck Bitcoin ETF (“HODL”) and VanEck Merk Gold ETF (“OUNZ”) (collectively, the “Trusts”): This material must be preceded or accompanied by a prospectus: (HODL: Prospectus, OUNZ: Prospectus). An investment in the Trusts involves significant risk and may not be suitable for all investors. The value of Bitcoin is highly volatile, and you can lose your entire principal investment. Before investing, you should carefully consider the Trusts’ investment objectives, risks, charges and expenses. Please read the prospectuses carefully before you invest.
The Trusts are not investment companies registered under the Investment Company Act of 1940 (“1940 Act”) or commodity pools for the purposes of the Commodity Exchange Act (“CEA”). Shares of the Trusts are not subject to the same regulatory requirements as mutual funds. As a result, shareholders of the Trusts do not have the protections associated with ownership of shares in an investment company registered under the 1940 Act or the protections afforded by the CEA.
The Sponsor for HODL is VanEck Digital Assets, LLC. The Sponsor for OUNZ is Merk Investments, LLC. The Marketing Agent for HODL and OUNZ is Van Eck Securities Corporation. VanEck Digital Assets, LLC., and Van Eck Securities Corporation are wholly-owned subsidiaries of Van Eck Associates Corporation.
VanEck Bitcoin ETF (HODL) Disclosures
The Trust's investment objective is to reflect the performance of the price of Bitcoin less the expenses of the Trust's operations. The Trust is a passive investment vehicle that does not seek to generate returns beyond tracking the price of Bitcoin.
An investment in the Trust is subject to risks which include, but are not limited to, the historically and potentially future extreme volatility of bitcoin, various potential factors that may adversely affect the liquidity of Trust shares, the limited history of the Index from which the value of bitcoin and hence the value of Trust shares will be determined, potential threats to the Trust’s bitcoin custodian, and the unregulated nature and lack of transparency surrounding the operations of bitcoin trading platforms, all of which may ultimately adversely affect the value of shares of the Trust. Please note that this is not an exhaustive list of risks pertaining to the Trust. Please read carefully the prospectus for a complete list of potential risks.
Because shares of the Trust are intended to reflect the price of the Bitcoin held in the Trust, the market price of the shares is subject to fluctuations similar to those affecting Bitcoin prices. Additionally, shares of the Trust are bought and sold at market price, not at net asset value (“NAV”). Brokerage commissions will reduce returns.
Trust shares trade like stocks, are subject to investment risk and will fluctuate in market value. The value of Trust shares relates directly to the value of the Bitcoin held by the Trust (less its expenses), and fluctuations in the price of Bitcoin could materially and adversely affect an investment in the shares. The price received upon the sale of the shares, which trade at market price, may be more or less than the value of the Bitcoin represented by them. The Trust does not generate any income, and as the Trust regularly issues shares to pay for the Sponsor’s ongoing expenses, the amount of Bitcoin represented by each Share will decline over time.
This content is published in the United States for residents of specified countries. Investors are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this content. Nothing in this content should be considered a solicitation to buy or an offer to sell shares of any investment in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction, nor is it intended as investment, tax, financial, or legal advice. Investors should seek such professional advice for their particular situation and jurisdiction.
VanEck Merk Gold ETF (OUNZ) Disclosures
Investing involves risk including possible loss of principal. The Trust is not an investment company registered under the Investment Company Act of 1940 or a commodity pool for the purposes of the Commodity Exchange Act. Shares of the Trust are not subject to the same regulatory requirements as mutual funds. Because shares of the Trust are intended to reflect the price of the gold held in the Trust, the market price of the shares is subject to fluctuations similar to those affecting gold prices. Additionally, shares of the Trust are bought and sold at market price, not at net asset value (“NAV”). Brokerage commissions will reduce returns.
The request for redemption of shares for gold is subject to a number of risks including but not limited to the potential for the price of gold to decline during the time between the submission of the request and delivery. Delivery may take a considerable amount of time depending on your location.
Commodities and commodity-index linked securities may be affected by changes in overall market movements and other factors such as weather, disease, embargoes, or political and regulatory developments, as well as trading activity of speculators and arbitrageurs in the underlying commodities.
Trust shares trade like stocks, are subject to investment risk and will fluctuate in market value. The value of Trust shares relates directly to the value of the gold held by the Trust (less its expenses), and fluctuations in the price of gold could materially and adversely affect an investment in the shares. The price received upon the sale of the shares, which trade at market price, may be more or less than the value of the gold represented by them. The Trust does not generate any income, and as the Trust regularly issues shares to pay for the Sponsor’s ongoing expenses, the amount of gold represented by each Share will decline over time. Investing involves risk, and you could lose money on an investment in the Trust. For a more complete discussion of the risk factors relative to the Trust, carefully read the prospectus.
ETF Model Portfolios
The models are not mutual funds or other types of securities and will not be registered with the Securities and Exchange Commission as investment companies under the Investment Company Act of 1940, as amended, and no units or shares of the models will be registered under the Securities Act of 1933, as amended, nor will they be registered with any state securities regulator. Accordingly, the models are not subject to compliance with the requirements of such acts. The models may also invest in digital assets, which are subject to significant risk, and are not suitable for all investors.
General VanEck ETF Fund Risks
The principal risks of investing in VanEck ETFs include sector, market, economic, political, foreign currency, world event, index tracking, active management, social media analytics, derivatives, blockchain, commodities and non-diversification risks, as well as fluctuations in net asset value and the risks associated with investing in less developed capital markets. The Funds may loan their securities, which may subject them to additional credit and counterparty risk. ETFs that invest in high-yield securities are subject to subject to risks associated with investing in high-yield securities; which include a greater risk of loss of income and principal than funds holding higher-rated securities; concentration risk; credit risk; hedging risk; interest rate risk; and short sale risk. ETFs that invest in companies with small capitalizations are subject to elevated risks, which include, among others, greater volatility, lower trading volume and less liquidity than larger companies. Please see the prospectus of each Fund for more complete information regarding each Fund’s specific risks.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
© 2025 Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.
Intelligently-designed exposure across asset classes for diversified portfolios
DISCLOSURES
* During the period commencing on November 25, 2024 and ending on January 10, 2026, the Sponsor will waive the entire Sponsor Fee for the first $2.5 billion of the Trust’s assets. If the Trust’s assets exceed $2.5 billion prior to January 10, 2026, the Sponsor Fee charged on assets over $2.5 billion will be 0.20%. All investors will incur the same Sponsor Fee which is the weighted average of those fee rates. After January 10, 2026, the Sponsor Fee will be 0.20%. Brokerage fees and commissions may apply. Please check with your broker. Please refer to the press release for more information.
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
VanEck Bitcoin ETF (“HODL”) and VanEck Merk Gold ETF (“OUNZ”) (collectively, the “Trusts”): This material must be preceded or accompanied by a prospectus: (HODL: Prospectus, OUNZ: Prospectus). An investment in the Trusts involves significant risk and may not be suitable for all investors. The value of Bitcoin is highly volatile, and you can lose your entire principal investment. Before investing, you should carefully consider the Trusts’ investment objectives, risks, charges and expenses. Please read the prospectuses carefully before you invest.
The Trusts are not investment companies registered under the Investment Company Act of 1940 (“1940 Act”) or commodity pools for the purposes of the Commodity Exchange Act (“CEA”). Shares of the Trusts are not subject to the same regulatory requirements as mutual funds. As a result, shareholders of the Trusts do not have the protections associated with ownership of shares in an investment company registered under the 1940 Act or the protections afforded by the CEA.
The Sponsor for HODL is VanEck Digital Assets, LLC. The Sponsor for OUNZ is Merk Investments, LLC. The Marketing Agent for HODL and OUNZ is Van Eck Securities Corporation. VanEck Digital Assets, LLC., and Van Eck Securities Corporation are wholly-owned subsidiaries of Van Eck Associates Corporation.
VanEck Bitcoin ETF (HODL) Disclosures
The Trust's investment objective is to reflect the performance of the price of Bitcoin less the expenses of the Trust's operations. The Trust is a passive investment vehicle that does not seek to generate returns beyond tracking the price of Bitcoin.
An investment in the Trust is subject to risks which include, but are not limited to, the historically and potentially future extreme volatility of bitcoin, various potential factors that may adversely affect the liquidity of Trust shares, the limited history of the Index from which the value of bitcoin and hence the value of Trust shares will be determined, potential threats to the Trust’s bitcoin custodian, and the unregulated nature and lack of transparency surrounding the operations of bitcoin trading platforms, all of which may ultimately adversely affect the value of shares of the Trust. Please note that this is not an exhaustive list of risks pertaining to the Trust. Please read carefully the prospectus for a complete list of potential risks.
Because shares of the Trust are intended to reflect the price of the Bitcoin held in the Trust, the market price of the shares is subject to fluctuations similar to those affecting Bitcoin prices. Additionally, shares of the Trust are bought and sold at market price, not at net asset value (“NAV”). Brokerage commissions will reduce returns.
Trust shares trade like stocks, are subject to investment risk and will fluctuate in market value. The value of Trust shares relates directly to the value of the Bitcoin held by the Trust (less its expenses), and fluctuations in the price of Bitcoin could materially and adversely affect an investment in the shares. The price received upon the sale of the shares, which trade at market price, may be more or less than the value of the Bitcoin represented by them. The Trust does not generate any income, and as the Trust regularly issues shares to pay for the Sponsor’s ongoing expenses, the amount of Bitcoin represented by each Share will decline over time.
This content is published in the United States for residents of specified countries. Investors are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this content. Nothing in this content should be considered a solicitation to buy or an offer to sell shares of any investment in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction, nor is it intended as investment, tax, financial, or legal advice. Investors should seek such professional advice for their particular situation and jurisdiction.
VanEck Merk Gold ETF (OUNZ) Disclosures
Investing involves risk including possible loss of principal. The Trust is not an investment company registered under the Investment Company Act of 1940 or a commodity pool for the purposes of the Commodity Exchange Act. Shares of the Trust are not subject to the same regulatory requirements as mutual funds. Because shares of the Trust are intended to reflect the price of the gold held in the Trust, the market price of the shares is subject to fluctuations similar to those affecting gold prices. Additionally, shares of the Trust are bought and sold at market price, not at net asset value (“NAV”). Brokerage commissions will reduce returns.
The request for redemption of shares for gold is subject to a number of risks including but not limited to the potential for the price of gold to decline during the time between the submission of the request and delivery. Delivery may take a considerable amount of time depending on your location.
Commodities and commodity-index linked securities may be affected by changes in overall market movements and other factors such as weather, disease, embargoes, or political and regulatory developments, as well as trading activity of speculators and arbitrageurs in the underlying commodities.
Trust shares trade like stocks, are subject to investment risk and will fluctuate in market value. The value of Trust shares relates directly to the value of the gold held by the Trust (less its expenses), and fluctuations in the price of gold could materially and adversely affect an investment in the shares. The price received upon the sale of the shares, which trade at market price, may be more or less than the value of the gold represented by them. The Trust does not generate any income, and as the Trust regularly issues shares to pay for the Sponsor’s ongoing expenses, the amount of gold represented by each Share will decline over time. Investing involves risk, and you could lose money on an investment in the Trust. For a more complete discussion of the risk factors relative to the Trust, carefully read the prospectus.
ETF Model Portfolios
The models are not mutual funds or other types of securities and will not be registered with the Securities and Exchange Commission as investment companies under the Investment Company Act of 1940, as amended, and no units or shares of the models will be registered under the Securities Act of 1933, as amended, nor will they be registered with any state securities regulator. Accordingly, the models are not subject to compliance with the requirements of such acts. The models may also invest in digital assets, which are subject to significant risk, and are not suitable for all investors.
General VanEck ETF Fund Risks
The principal risks of investing in VanEck ETFs include sector, market, economic, political, foreign currency, world event, index tracking, active management, social media analytics, derivatives, blockchain, commodities and non-diversification risks, as well as fluctuations in net asset value and the risks associated with investing in less developed capital markets. The Funds may loan their securities, which may subject them to additional credit and counterparty risk. ETFs that invest in high-yield securities are subject to subject to risks associated with investing in high-yield securities; which include a greater risk of loss of income and principal than funds holding higher-rated securities; concentration risk; credit risk; hedging risk; interest rate risk; and short sale risk. ETFs that invest in companies with small capitalizations are subject to elevated risks, which include, among others, greater volatility, lower trading volume and less liquidity than larger companies. Please see the prospectus of each Fund for more complete information regarding each Fund’s specific risks.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
© 2025 Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.