• Portfolio diversification in 2026 is being redefined in an environment of heightened global volatility, driven by geopolitical fragmentation and the impact of the war in the Middle East.
• Securitization enables the conversion of untapped assets (“untapped assets”) into liquidity by pooling them and transforming them into tradable securities, which can then be sold in the markets.
• FlexFunds facilitates the structuring of investment vehicles that enable the transformation of illiquid assets into bankable instruments, broadening access to global diversification strategies.

Portfolio diversification in 2026 is being redefined by a macroeconomic environment of heightened volatility and uncertainty driven by the war in the Middle East that is pushing asset managers to seek alternatives.

Amid current macroeconomic shocks, asset managers’ interest in seeking more efficient returns outside traditional markets is intensifying.

“Diversifying helps reduce the correlation between invested assets, which opens the possibility of improving returns and reducing a portfolio’s volatility,” asset manager BlackRock notes in a blog. 

It explains that “risk is a constant in financial markets because it is precisely the root of returns. For this reason, the benefits of diversification are even more noticeable during periods of high volatility, in which the total risk of a diversified portfolio will be lower than that of the sum of its components”.

According to BlackRock, it is possible to diversify a portfolio across a universe of options that include equities, fixed income, currencies, commodities, or alternative assets.

Current macroeconomic conditions, with higher rates for longer and reduced effectiveness of conventional portfolios, are driving the search for more diversified and resilient strategies.

The potential of “untapped assets”

Alternative assets, which include options such as private equity, real estate or infrastructure, and “untapped assets”, resources with potential value that remain underutilized due to their low liquidity or the lack of suitable vehicles to leverage them, are gaining relevance in portfolio diversification.

“Untapped assets” do not constitute a formal asset class, but rather a broader universe of economic value not yet fully monetized. 

Part of this value can eventually be integrated into private markets as investment and financing structures develop.

According to FlexFunds, “untapped assets” provide diversification for asset managers because they are illiquid instruments that generate future cash flows, but cannot be easily traded in traditional markets, which reduces their correlation with equities and bonds.

They include lease contracts, long-term loans, accounts receivable, real estate projects in development, royalties, patents, and financial assets with low turnover.

For managers, structuring them enables optimized capital allocation, improved portfolio efficiency, and access to additional return sources that are less dependent on the liquid markets cycle.

Alternative assets and so-called “untapped assets” are gaining relevance by offering return sources less correlated with conventional markets.

Why are investors looking at these assets in 2026?

Interest in integrating these assets into portfolios is tied to three structural trends in the global market.

First, lower correlation between conventional assets during episodes of financial stress.

Second, a higher-for-longer interest rate environment, that forces the search for more efficient returns.

And third, the need for genuine diversification in the face of simultaneous shocks in growth, inflation, and geopolitics.

Together, these factors have driven a more active search for alternative return sources, while the universe of opportunities not yet fully captured within the global financial system continues to expand.

Investors are no longer seeking only profitability, but also resilience and flexibility in the structure of their portfolios.

The development of specialized infrastructure has been key to the expansion of this market.

Platforms like FlexFunds have emerged as enablers within the structured investments ecosystem.

Their function focuses on facilitating the structuring and distribution of investment vehicles at an international level, connecting asset originators with global investor networks more efficiently. In practice, this type of infrastructure lowers barriers to entry and broadens access to alternative strategies.

Securitization as a bridge between illiquidity and liquidity

One of the most relevant mechanisms for transforming untapped assets into investment instruments is securitization.

This process enables the conversion of illiquid assets or future cash flows into tradable securities in financial markets. In simple terms, it involves repackaging assets that are not easily tradable and transforming them into liquid instruments.

Securitization acts as a bridge between the illiquidity of certain assets and their integration into global financial markets.

This can include anything from credit flows to real assets or future income derived from contracts.

Securitization thus serves a dual function, as it both frees up capital and expands the available investment universe. For asset originators, it enables the early monetization of future value.

The securitization market is evolving with new asset types and structures, S&P Global explains. 

Among these, it points to data center ABS, which is gaining traction as a funding source.

Likewise, reverse mortgage securitization is expanding in markets with aging populations, while Bitcoin-backed lending “is emerging as a new collateralized asset class,” S&P Global indicates. 

“Private credit is also drawing global attention and reshaping the future of securitization,” it adds.

For investors, securitization opens access to asset classes that were previously difficult to incorporate into diversified portfolios.

Through FlexFunds’ solutions, asset managers can transform any type of asset into a bankable asset in an agile and cost-efficient way.

FlexFunds’ process enables the conversion of assets into bankable instruments through the agile structuring of an ETP.

The client selects the assets to be securitized, and the firm handles the issuance, administration, and accounting of the vehicle. 

This allows launching the ETP in less time and at a lower cost than conventional alternatives, grouping the assets into a single product that can then be marketed in global capital markets.

Impact on modern portfolio construction

The incorporation of alternative assets and securitization structures is changing the way portfolios are built.

The focus has shifted toward more diversified portfolios, where liquidity, risk, and the interplay between assets are managed with greater precision.

In this new framework, alternative assets provide diversification while securitization delivers capital efficiency, allowing managers to better calibrate their clients’ exposure to different macroeconomic scenarios.

Despite their benefits, these instruments are not without challenges, as the valuation of underlying assets can be complex and less transparent than in public markets.

Furthermore, the legal and regulatory framework varies significantly across jurisdictions, which in practice introduces operational friction that requires specialized infrastructure for proper implementation.

Risk management also becomes more sophisticated, particularly when dealing with illiquid assets or future cash flows.

As a result, accessing these instruments typically requires platforms with advanced technical and legal capabilities.

Modern portfolio management simultaneously seeks resilience, capital efficiency, and lower correlation between assets.

Diversification in a more fragmented world

Diversification in 2026 can no longer be understood as merely a combination of conventional asset classes.

The fragmentation of global markets has elevated the importance of less-correlated return sources.

In this context, alternative assets and securitization play a strategic role within capital allocation, enabling more efficient risk distribution and access to opportunities not available in liquid markets.

This is especially relevant in an environment where shocks are more frequent and simultaneous. According to Julius Baer’s Global Wealth and Lifestyle Report, Europe and North America tend to be considerably more conservative across a range of other financial topics as well, from portfolio risk and diversification to financial education and sustainable investments. 

Europe has a higher level of concentration in the portfolios of high-income individuals, with real estate as the primary allocation (24%), followed closely by equities (23%) and funds (18%), according to Julius Baer. 

Meanwhile, in portfolios in North America equities rank first at 20%, followed by funds (18%) and cash (15%).

In the case of Latin America, the main trend is equities (15%), followed by real estate (13%) and funds (11%).

The rise of alternative assets and securitization reflects a deeper shift in the logic of global investment.

Capital is no longer allocated solely among traditional instruments but is now actively seeking to transform untapped assets into liquidity.

This process expands the investment universe and redefines the way portfolios are built in 2026.

Ultimately, diversification ceases to be merely a defensive strategy and becomes an active mechanism for generating opportunities. If you would like to learn more about the products developed by FlexFunds and which solution best suits your needs, please do not hesitate to contact our team of specialists.

Sources: 

• https://www.blackrock.com/co/educacion/que-es-diversificacion
• https://www.juliusbaer.com/fileadmin/publications/julius-baer-global-wealth-and-lifestyle-report-2025.pdf
• https://www.spglobal.com/ratings/en/multimedia/20260410-emerging-trends-in-global-securitization