Special Coverage: 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 frameworks. Meanwhile, the specter of 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 while the US government shutdown has not yet disrupted markets in the short term, prolonged closure would prevent businesses, entrepreneurs, and individuals from obtaining government approvals or making business decisions, leading to economic stagnation. "I believe anything over 2 weeks will impact the economy, and beyond 6 weeks would create significant, even extreme shocks."

Regarding international asset allocation, Rich Nuzum emphasized three times his "long-term bullish stance on China." Recently, some European and American venture capital investors visited Chinese new energy facilities like CATL and concluded that Western clean energy has almost lost investment value, suggesting cooperation with Chinese companies rather than competition.

When asked whether this represents the formation of a new cross-border capital paradigm, Rich Nuzum expressed hope for restarting US-China cooperation in venture capital and research fields. "The weakening of these connections over the past five years has been 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 approximately 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 recommends a 15% gold allocation in portfolios. Is this percentage too high or too aggressive? How should we understand such a heavy weighting?

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

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

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

From the limited historical data available, 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 primary 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 lacks gold's safe-haven functionality.

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

Rich Nuzum: If the shutdown lasts too long, it will have substantial impact. Businesses, entrepreneurs, and individuals cannot obtain government approvals or services, cannot advance 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 will impact the economy, and beyond 6 weeks would create significant, even extreme shocks.

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

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

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

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

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

Rich Nuzum: The change has been very significant. Compared to January, markets now have much greater confidence in actual productivity improvements from AI and digitization. Understanding of AI driving 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 elevated in January, earnings growth has now materialized and even exceeded expectations. So overall, confidence in the AI and digitization wave has strengthened.

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

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

I sincerely hope we can restart US-China cooperation in venture capital and research fields. The weakening of these connections over the past five years has been detrimental to both sides and globally. Globalization and free trade have lifted half the world's population out of poverty over the past 50 years, but approximately 10% of the population remains unbenefited. If we can improve international relations and trade cooperation, this process will accelerate while also helping underdeveloped regions like Africa gain access to electricity, clean water, and educational resources.