$350 Billion CIO on Iran-Israel War, Safe Heaven Assets & more - Sinead Colton Grant, CIO, BNY Wealth

Before getting into positioning, Sinead set a foundation that shaped every answer that followed: time in the market beats timing the market — and the math is more brutal than most people realize.

Her team has studied what happens when investors exit during volatile stretches and struggle to get back in. Miss the ten best days in a given year and your annualized return over two decades drops materially. Miss the twenty best days — and your return turns negative.

The reason is structural: some of the best days in market history follow directly after some of the worst. Investors who step out to "protect capital" often sit in cash through the very days that determine long-term outcomes.

For BNY Wealth, this isn't just an observation — it's the operating principle behind multi-generational portfolio management. Their structural advantage over most investors is time horizon. Holding that horizon through noise is the job.

BNY Wealth is pro-growth and the positioning reflects it: overweight US large cap, underweight emerging markets and international developed, overweight high yield within fixed income, small overweight to real assets.

None of that is particularly controversial. The non-consensus view is on the dollar.

Coming into this year, the prevailing expectation was continued dollar weakness. Sinead rejects that. Her reasoning: the Fed is no longer on a clear rate-cutting path — energy prices are keeping inflation elevated and cuts are being priced out. Meanwhile, Japan and Europe may need to hike rates to combat their own inflation, but those hikes will arrive alongside slowing economic growth. That combination doesn't weaken the dollar — it strengthens it.

Her view: we have seen the trough. The dollar moves higher against most currencies from here.

For US investors, this has an important implication: a significant portion of international developed's strong recent performance came from dollar weakness, not underlying earnings outperformance. Remove that tailwind, and the case for international developed deteriorates sharply.

When asked about the most underappreciated risk in markets, Sinead was direct: the Middle East, and specifically what a prolonged energy shock would do to inflation.

Markets are currently assuming the conflict resolves within a few weeks. Sinead thinks that assumption is fragile — and the cost of being wrong is high.

The math: oil prices sustained above $100/barrel adds 0.2–0.3 percentage points to inflation in the US. In Europe and Asia, the same scenario pushes the impact above 0.5 percentage points — potentially toward 0.8–1 percentage point depending on duration.

That matters because inflation is the input to everything. It determines the path of central bank policy. And Fed rate cuts have already been priced out — what hasn't been priced in yet is the possibility of rate hikes re-entering the conversation. If that scenario plays out, equity markets sell off, bond markets sell off, the dollar strengthens further, and the pressure falls hardest on emerging markets and interest rate-sensitive small caps.

One additional dimension she flagged: AI deployment is extraordinarily energy-intensive. A prolonged energy shock doesn't just affect inflation — it affects the pace at which AI infrastructure can actually be built.

BNY Wealth conducts an annual survey of the family offices it works with. The two trends most visible in recent results — and most significant for where capital is flowing — are digital assets and sports investing.

Digital assets: Over 75% of respondents are either already allocated or planning to allocate within the next twelve months. This isn't primarily a Bitcoin story. The exposure spans tokens, blockchain infrastructure, stablecoins, and VC managers focused on the space. What shifted: regulatory clarity in the US over the past year has moved digital assets from speculative to plannable.

Sports investing: A third of survey respondents now hold a sports allocation. Before the pandemic, meaningful participation in sports investment required near-total team ownership — accessible only to the ultra-wealthy. That's changed. Diversified vehicles offering exposure across multiple teams and revenue streams have opened the asset class considerably. Family offices like it for three reasons: next-generation engagement, genuine portfolio diversification, and increasingly, its behavior as a quasi inflation hedge.

Both trends are also downstream of something larger: the great wealth transfer. Over $120 trillion in assets is expected to change hands over the next two decades. The next generation's preferences — more tech-forward, more alternatives-heavy, more values-aware — are already reshaping allocation conversations inside family offices.

In the late 1990s, the US had approximately 8,000 public companies. Today: around 3,500. Private equity-backed companies, over the same period, quadrupled to roughly 16,000. Being public is more expensive, more regulated, and more constraining than it has ever been — and many of the largest private companies in the US may never go public at all.

This has a direct consequence for long-term investors: the IPO-to-large-cap value creation journey that defined public market investing for decades has largely disappeared. The returns are being captured earlier, in private markets. Investors who limit themselves to public markets are increasingly accessing companies only after the majority of their value has already been created.

The critical caveat Sinead emphasized: manager selection in private markets operates on a different scale than in public markets. In US large cap, the spread between the best and worst active manager is roughly 800 basis points. In private equity, that spread can be 20, 30, even 40 percentage points in certain vintages. The asset class rewards the right managers with extraordinary persistence — and punishes poor selection in ways public market investors aren't accustomed to.

Gold has been falling during the current conflict. For investors who built portfolios around gold as a crisis hedge, this has been disorienting.

Sinead's framing: safe haven status is not permanent — and treating historical labels as fixed is a mistake.

Her background is in currency markets, where this dynamic plays out constantly. The Japanese yen held safe haven status for decades. It doesn't today, because Japan is a net oil importer — in an energy shock, the yen weakens. The British pound hasn't functioned as a safe haven since the financial crisis. The Swiss franc still works, largely because of its current account surplus, though the Swiss National Bank actively resists it.

The more useful question isn't "is this a safe haven?" but "what specific risk am I actually hedging, and does this asset actually hedge it?"

Right now, the dominant risk is elevated energy prices feeding into inflation and forcing a shift in central bank behavior. In that environment, the dollar is likely to function as a more reliable safe haven than gold. And real assets — commodities, infrastructure, real estate — are better positioned than most traditional "defensive" allocations for an inflationary environment.

Two explicit underweights: gold and international developed markets.

On gold: the narrative around de-dollarization and central bank reserve accumulation drove a significant run-up. Sinead doesn't see the fundamentals as sustainable. Gold has no yield, costs money to store, and performs well only in a narrow set of scenarios.

On international developed: the strong recent performance was largely a dollar-weakness story, not an earnings story. With the ECB potentially heading back toward rate hikes into a slowing economy, and European earnings expansion unlikely to pace the US, the fundamental case doesn't hold. The regulatory environment adds a structural risk: if Europe regulates AI the way it regulated the broader technology sector, the outcome could be another decade without large-cap AI winners on the continent.

Sinead made one specific observation about AI that stands apart from the broader noise: memory chip supply is already spoken for.

All available memory chip supply needed for AI infrastructure is already committed for 2026. Supply heading into 2027 is mostly sold out. 2028 is already being spoken for. This supply-demand imbalance is concrete — and it supports a specific, bounded investment thesis in memory and adjacent semiconductors that doesn't require picking winners among AI software companies or speculating on which LLMs survive.

The broader AI thesis she holds: the ecosystem is still early, and the market — as in the dot-com era — is struggling to identify winners and losers in advance. The most sophisticated family offices she works with are accessing the space through private equity, venture capital, and selective direct stakes, rather than concentrating exposure in volatile public market names.

Connect with:

Sinead Colton Grant and Prashant Choubey

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