Feature: 2025 Greenwich Economic Forum

Against a backdrop of intensifying market volatility and policy uncertainty, investors are reassessing the balance between "safety" and "growth." Gold's safe-haven appeal has been reinforced once again, while the artificial intelligence wave continues to reshape valuation systems. Meanwhile, the shadow of a US government shutdown and geopolitical tensions have made global asset allocation increasingly complex.

During the 2025 Greenwich Economic Forum, Rich Nuzum, Head of OCIO Business at Franklin Templeton, stated that a US government shutdown has not yet caused market disruption in the short term. However, if the shutdown persists too long, preventing businesses, entrepreneurs, and individuals from obtaining government approvals or affecting business decisions, it would lead to economic stagnation. "I believe anything over 2 weeks would impact the economy, and anything over 6 weeks would create significant, even extreme shocks."

When asked about international asset allocation, Rich Nuzum emphasized three times that he is "bullish on China long-term." Recently, some European and American venture capital investors visited Chinese new energy factories including CATL, concluding that Western clean energy has almost lost its investment value, and that cooperation with Chinese companies is preferable to competition.

When asked whether this represents the formation of a new cross-border capital paradigm, Rich Nuzum expressed hope for restarting China-US cooperation in venture capital and scientific research. "This connection has weakened over the past five years, which is detrimental to both sides and the world." He noted that globalization and free trade have lifted half the world's population out of poverty over the past 50 years, but about 10% of the population remains unbenefited. Improving international relations and trade cooperation could help other underdeveloped regions gain access to electricity, clean water, and educational resources.

Franklin Templeton Investment Solutions (FTIS) launched its first strategy in 1996 and manages $93 billion in assets as of June 2025.

Interview Transcript:

Q: Dalio suggests a 15% gold allocation in investment portfolios. Isn't this ratio too high and aggressive? How should we understand such a heavy position?

Rich Nuzum: It depends on the situation. Our clients have long used gold as a hedge asset, but typically on a tactical basis, depending on their market outlook and performance of other asset classes, rather than maintaining a fixed proportion long-term. Historically, gold's real return is close to 0%. Current US short-term rates are around 3.25%, meaning you're giving up this interest income to hold gold. But in the short term, gold is indeed an excellent hedge against risks like inflation and government debt monetization.

Q: What about cryptocurrencies? Particularly Bitcoin - can it hedge inflation like gold?

Rich Nuzum: No, it cannot. My colleagues might hold different views, but my answer is negative.

From limited historical data, Bitcoin is highly correlated with stock markets. When risk appetite is high, Bitcoin rises; when risk appetite is low, Bitcoin falls. This isn't ideal hedging behavior. Ideal hedge assets should be uncorrelated or even negatively correlated with major assets. Like gold, Bitcoin has no yield. The difference is it also faces regulatory risks. So from a long-term investment perspective, gold is far superior to Bitcoin.

Of course, from a speculative standpoint, Bitcoin remains part of the market's "experimental tools," but from a hedging perspective, its correlation data is unstable and it doesn't possess gold's safe-haven function.

Q: Back to the US government shutdown issue you mentioned on stage. You said it would affect America's global reputation. Beyond "image-level" impacts, would it cause actual shocks to markets or the broader economy?

Rich Nuzum: If the shutdown lasts too long, it would have substantial impact. Businesses, entrepreneurs, and individuals cannot obtain government approvals or services, preventing them from advancing economic decisions. If companies expect customers to reduce spending, they'll also cut spending, and since everyone is someone else's customer, this creates a "self-reinforcing" chain reaction.

Q: How long is "too long"? The last government shutdown lasted about 35 days, roughly a month.

Rich Nuzum: There's no absolute threshold, but I believe anything over 2 weeks would impact the economy, and anything over 6 weeks would create significant, even extreme shocks.

Q: So people would temporarily "wait and see"?

Rich Nuzum: Yes. Once businesses and consumers start postponing decisions - like delaying car purchases, home purchases, travel, or job changes - economic activity is immediately affected. The impact starts showing after two weeks and becomes quite serious beyond six weeks.

Q: During shutdowns, employment reports cannot be released on time. Would investors wait for government data before making decisions?

Rich Nuzum: No. Investors and fiduciaries don't have the luxury of "waiting." We must make judgments amid uncertainty and diversify risk allocation. Some will turn to cash, gold, or Bitcoin, essentially taking a brief pause, but most won't. They maintain long-term perspectives and continue acting amid uncertainty.

Q: We discussed the AI boom in Davos this January. Looking back from January to now, how has market sentiment changed?

Rich Nuzum: The change has been very significant. Compared to January, markets now have more confidence in actual productivity gains from AI and digitalization. Understanding of AI-driven energy demand (especially electricity) is also clearer. Investors generally believe AI and digital companies will continue achieving strong earnings and cash flow growth. Even though valuations seemed high in January, earnings growth has now materialized and even exceeded expectations. So overall, confidence in the AI and digitalization wave has strengthened.

Q: Finally, regarding emerging markets. Recently, some European investors visited Chinese new energy factories like CATL and concluded that Western clean energy has almost no investment value, with competition in this field essentially reaching endgame, leading them to seek cooperation instead. Does this represent a new cross-border capital paradigm forming?

Rich Nuzum: I'm bullish on emerging markets long-term. AI and digitalization are lowering participation barriers. Even without English proficiency, AI can provide instant translation, enabling more people to join the global economy. I'm equally bullish on China long-term. China's economy is too large to be passively allocated based solely on index weights. Currently, in some global indices, three US companies' combined weight exceeds all of China, which is clearly unreasonable. China accounts for 1/8 of global GDP and deserves separate allocation decisions.

I sincerely hope to restart China-US cooperation in venture capital and scientific research. This connection has weakened over the past five years, which is detrimental to both sides and the world. Globalization and free trade have lifted half the world's population out of poverty over the past 50 years, but about 10% of the population remains unbenefited. Improving international relations and trade cooperation would accelerate this process while helping underdeveloped regions like Africa gain access to electricity, clean water, and educational resources.