There is a particular kind of investor, Henry Neville of Man Group admits, who secretly wanted to be James Bond. Most of them ended up managing portfolios instead. In times of geopolitical turbulence, that suppressed vocation tends to resurface — with consequences, usually unhelpful ones, for investment discipline. Neville's Apocalypse Now?1, published April 2, 2026, is a deliberate corrective: a data-driven study of nearly 40 conflicts from World War II to the present, designed to replace armchair military instinct with something more durable. "In an object lesson in self-denial," he writes, "I'm going to go light on discussion of asymmetric warfare and materiel (with an 'e') and instead focus on conflict price action."
The result is one of the more rigorous attempts in recent institutional literature to answer a deceptively simple question: when war breaks out, what actually happens to your assets — and is there a portfolio construction that holds up?
The Timing Trap
The first and perhaps most important finding is one that will frustrate the tactically inclined. Across 20 trading days prior to the outbreak of each conflict in Neville's sample, the hit rate for the S&P 500 is 51%. For the dollar, 54%. For gold, 50%. In other words, roughly a coin toss across the board. No asset class reliably anticipates the outbreak of conflict, which carries a direct implication for portfolio construction: "If your portfolio has a war-hedge component, it's a permanent component: don't bother trying to time troop movements."
This is not a minor point. Much of what passes for geopolitical risk management in practice is reactive — rotating into defence stocks after headlines break, adding gold after the first missile strike. Neville's data suggests this approach is not only unreliable but likely counterproductive. The war hedge, if it is to be effective at all, must already be in place.
Equities: Sell the Cannon, Buy the Trumpet
The equity picture is more nuanced than simple risk-off intuition would suggest. Markets do sell off initially — the week and month following a conflict event are negative on average. But the Rothschild maxim, "buy to the sound of cannons, sell to the sound of trumpets," holds up reasonably well over longer horizons. Six months out, equities are positive in more than 70% of cases. "Moreover, you almost always get a sharp relief rally at some stage during the 12 months, even if it ends up as a bull trap. The median largest 20-day equity move in the 12-month period following 35 completed events is 10%."
The exceptions are well-defined and carry direct relevance to the current environment. Germany's invasion of France in 1940 saw stocks fall 22% over the following year. The Yom Kippur War produced a 38% decline. September 11 saw a 16% drop — though Neville notes that in that case, the dot-com crash was already underway. His taxonomy of failure modes is precise: the theory breaks down when "it's the big one (WWII)," when there is "a large and persistent effect on energy markets (Yom Kippur War)," or when "something else is going on."
The relevance to today is deliberately left open. "I'll take a pass on existential risk. Lasting disruption to fuel prices? Not beyond the realms of possibility. Other stuff we've temporarily forgotten? Private credit, the 'SaaSpocalypse', the return on investment (ROI) on AI capex, fiscal sustainability… No shortage of candidates."
Gold's Anomaly
The historical record on gold is compelling — and the current data point is startling. Across prior conflict episodes, gold is positive 85% of the time in the five days following an event, and above 60% on virtually every forward horizon. It is, by Neville's assessment, "the most reliable war hedge there is, at least on historic precedent examined here."
Which makes the recent behaviour all the more notable. From February 27 through March 23, 2026, gold fell approximately 16%. Neville calls it "unprecedented." The next worst comparable drawdown in the dataset — across the 17 trading days following each prior event — was a -3% reading following the U.S. invasion of Grenada in 1983. Neville had flagged unusual behaviour in gold on the way up; he now notes "that weirdness is extending to the way down." He offers no definitive explanation, which is itself instructive. When the most reliable war hedge in the historical record behaves unlike anything it has done before, the appropriate response is heightened attention, not confident reinterpretation.
Bonds and the Dollar: The Slow Burn
Yields and the dollar tell a related story, and Neville groups them deliberately. The immediate price action in both tends to be inconclusive — but a lag effect appears, particularly in bonds. In the 12 months following conflict dates, yields are higher 62% of the time, by an average of 28 basis points — "miles above the unconditional." His interpretation centres on the inflationary mechanism of war: supply-chain disruption takes time to fully feed into CPI, and bond markets tend to be slow to reprice. "It takes time before the market properly twigs that supply-chain disruption has a cost, and it's usually the consumer who is presented with the bill."
The current implication is quantified. Using oil at $85 per barrel as a partial settling assumption and estimates of 20–50 basis points of CPI impact per 10% oil move, Neville suggests 2026 inflation could print between 3.2% and 3.9%. The structural question this raises is pointed: "Is 3% the new 2%? If you miss your target that consistently on the upside, there's got to be some point where in practice you've got a new one."
The dollar's pattern is similar — indecisive early, but with an upward drift over time, reflecting both flight-to-safety demand and the disproportionate scale of U.S. military capacity. Neville notes that American defence spending of close to $1 trillion annually exceeds the next five largest spenders combined by more than $250 billion.
Oil: Fast, Powerful, and Fades
Oil is the most visceral wartime asset. In the very early days of major conflict, the move is sharp and consistent — with an average return 19 times the unconditional one-week reading. "While gold might be the most stable war hedge historically, black gold might as well be the fastest acting and most powerful."
But the effect fades quickly. At six months, the hit rate falls below 50% and average returns drop to a fifth of the unconditional. The pattern Neville identifies is characteristic: oil spikes with the initial shock, then unwinds as geopolitical risk premium dissipates. This has direct implications for how oil fits in a war hedge — it is a short-duration instrument, not a long-term anchor.
The War Bucket
Neville's proposed solution is a dedicated allocation he calls the "war bucket" — a diversified ensemble of oil futures, precious metals, defence stocks, fossil fuel producers, quality factor, momentum, trend-following strategies, and S&P puts (10% out of the money, on a three-month roll). The puts receive a static 10% weight; the remainder is equal risk-weighted.
Simulated across nearly a century of data, the results are honest about the trade-off. Equities outperform the war hedge portfolio in raw return terms following conflict dates — risk appetite returns faster than most expect. But the war bucket achieves "more than halving in risk, both on a standard deviation and max drawdown basis." Neville's reaction: "Perhaps I'm just gun-shy."
The admission is more than rhetorical modesty. It captures the core tension in war portfolio construction: the cost of the hedge is paid in ordinary returns foregone, and the benefit materialises only in the tail events that the Rothschild heuristic cannot handle.
Key Takeaways for Advisors and Investors
1. The war hedge must be structural, not tactical. Pre-event market signals are statistically indistinguishable from noise. A hedge built in response to headlines has already missed most of its purpose.
2. Equities recover — except when they don't. The three failure modes (world war, persistent energy shock, concurrent crisis) are each plausible today. The base case remains recovery; the tail is fat.
3. Gold's current behaviour is without historical precedent. A -16% drawdown during active conflict is anomalous by a wide margin. Advisors relying on gold as the primary hedge should treat this as a signal to reassess the composition of their defensive allocation.
4. Inflation is the underappreciated war transmission mechanism. Bonds face upward yield pressure that builds slowly and persists. Duration positioning deserves scrutiny in any geopolitically elevated environment.
5. Oil is a short-duration trade, not a long-term hedge. Its early spike is reliable; its persistence is not. If oil prices do not retrace meaningfully within 12 months, Neville's fifth lesson applies: "watch energy markets like a bald eagle… if they don't meaningfully retrace over the next 12 months, you should worry more broadly."
6. The war bucket lowers risk by more than half — at a cost in returns. For advisors constructing portfolios for clients with asymmetric loss tolerance, the simulation data supports the allocation. For those optimising for performance through the cycle, the case is weaker.
7. Do not forget the pre-war agenda. Neville's fourth lesson is easily overlooked: "don't forget the big things you cared about before the war; they might come back." Private credit, AI capex returns, and fiscal sustainability were market concerns before the current conflict. They will be again.
Footnote:
1 Henry Neville, Man Group. "Apocalypse Now?" Road Ahead Series, April 2, 2026. Intended for institutional investors, qualified investors, and investment professionals only. Not for retail distribution.
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