Choosing investments in the light of the macro cycle

An investment’s performance owes less to its own features than to its interaction with the prevailing macro regime: the same vehicle shifts risk-return profile depending on the level of rates, inflation and liquidity.

“Which is the best ETF?”, “the best investment to get started?”: these questions assume a stable answer exists, valid regardless of context. It is the assumption most rankings adopt, ordering vehicles by their fees, their structure or their recent past performance. It is also the assumption that the asset allocation strategies pillar sets out to replace with a regime-based one.

That grid sets aside the variable that moves the ranking most: the macroeconomic regime. An asset that leads in a phase of disinflation and abundant liquidity can fall to the back of the field when real rates climb. The “best” investment is not an intrinsic property of the product; it is a position relative to an environment of rates, inflation and financial conditions. Worth reading alongside: gold’s role across the real-rate regime.

The trap of the single ranking

A comparison presented as valid “in all circumstances” makes a promise the cycle never keeps. The criteria it ranks do not vanish, but they stop being decisive the moment the regime shifts. This dynamic is examined in detail in guaranteed funds versus unit-linked across the rate regime.

The three dimensions that rewrite the ranking

The rate regime, first. The level and direction of policy rates, transmitted to real rates through inflation expectations, alter the relative value of future cash flows. What lifts long-duration assets — growth equities, long-dated bonds — in an easing phase weighs on them in a tightening phase: precisely what the behaviour of the main bond ETF categories across the rate regime documents. The transmission is not instantaneous: it plays out over roughly a year to eighteen months between the monetary decision and its full effect on the real economy, a regularity long documented in central-bank research — a lag that resurfaces in how guaranteed funds and unit-linked savings behave across the rate regime.

The inflation regime, next. High and volatile inflation erodes returns differently across vehicles: an asset such as gold, whose role turns on the real-rate regime, protects in some regimes and not in others. The gap between nominal and real return becomes the decisive variable: it widens or narrows with the regime, and it is that gap, not the headline return, that determines what remains once monetary erosion is netted out — the very question of what has actually protected savings, and in which inflation regime.

Liquidity conditions, finally. The abundance or scarcity of liquidity, steered by central-bank balance sheets and bank financing conditions, moves risk appetite and market depth. In periods of stress it reaches the effective liquidity of certain vehicles — as with listed property repricing through the rate cycle — at the very moment the holder needs it most.

Reading the vehicles, reading the cycle

One difficulty these comparisons do not resolve on their own: identifying the prevailing regime in real time, when transitions are slow and the signals often contradictory. The episode that defined the exercise is reconstructed in the Volcker shock of 1979-1982 and forced disinflation. This is where reading the vehicles meets reading the cycle. The first only makes sense anchored to the second: knowing an asset’s sensitivity to rising real rates is useless if one misreads the regime one is in. Also relevant: how listed property reprices across the rate cycle.

That is why each comparison in this series refers back to the macro framework it relies on, rather than delivering a context-free ranking. To locate that framework, Eco3min’s regime reading provides a continuous update, vehicle by vehicle — the common starting point for all the analyses that follow. Directly related: what has protected savings across inflation regimes.

Last updated — 18 September 2026