Geopolitics is now the top economic threat to asset owners, according to a Natixis IM and CoreData survey of 515 super funds, insurers, foundations, endowments, central banks and sovereign wealth funds managing a collective AU$46 trillion.

Almost half of respondents said that geopolitics was now the biggest economic threat, ahead of a bursting tech bubble, recession or government debt crisis.

Seventy two per cent of respondents said that realignment of the global security order will force them to rethink their investment theses for certain countries, with 63 per cent warning that politicisation of US institutions will weaken the investment case for US assets.

Concerns about global politics and policy are also mounting, with 73 per cent of asset owners worrying that political dysfunction presents a growing threat to market stability and 77 per cent say that the tariff environment will continue to be a “moving target” in 2026.

Rare earth mineral security is also now seen as the “new energy security” by 63 per cent of respondents, with China’s restrictions on antimony supplies, critical to the manufacture of armaments, highlighting their strategic importance.

But uneasy geopolitics could also provide upside, with 65 per cent of respondents anticipating that defence spending will buoy growth across developed markets and open up new opportunities in private markets.

The rise of AI is also complicating the threat environment, with almost 70 per cent of respondents saying that AI’s rapid growth will open them up to new geopolitical risks.

Locally, 83 per cent of Australian investors – while “loving AI fuelled returns” – also believe AI is a bubble, with half of respondents predicting that it will burst in 2026.

“While we’re starting to see some speculative premium in public market valuations leak out of the widely touted AI bubble, we still expect AI to drive productivity improvements across private markets and especially middle market companies,” said Louise Watson, Natixis IM country head of Australia and New Zealand.

“Our view is that there is a low probability of a near term recession in the US because these companies are starting to use AI technologies to support a wide variety of functions to drive customer growth and retention data as well as improving business margins.”