Risk free: why low-yielding assets can no longer be considered safe

The lower the return, the lower the risk - many investors have accepted this as axiomatic for years. But the year 2026 is testing the market's most stable ideas about reliability, and even the most "calm" financial instruments may hide unpleasant surprises. Oninvest spoke to Vadim Merkulov, Director of the Analytical Department at Freedom Finance Global, about why this is the case and which "safe" assets are most risky.

"What risk am I being paid for, and what risk am I taking for free?" is the most important question an investor asks himself, especially in the current times, says Vadim Merkulov.

He looks at three assets - gold, long-term US Treasuries when bought through an exchange-traded fund and software stocks also through an exchange-traded fund. All three show in 2026 that the usual logic of safe haven assets no longer works, and there is no guarantee that an asset will behave like a safe haven in times of stress.

UBS analysts in an April 15 note come to a more categorical conclusion: in 2026, there are virtually no assets left that would simultaneously protect against both energy market turmoil and geopolitical and tariff shocks.

Now it is not a universal asset or an instrument with a "usual protective label" that becomes truly protective, but the one that corresponds to a specific risk in the portfolio, says Merkulov.

Everything else is not security, but just a calm packaging for the risk that the market does not want to notice yet, says the expert.

For decades, gold has been seen as a universal insurance against inflation, currency turmoil and even war. But that all changed in early 2026. After months of rapid growth, during which the price of the metal reached a record high of about $5.6 thousand per ounce in January, the market turned sharply. On April 29, gold was worth about 18% less than its January peak.

Too many investors with the same expectations have accumulated in gold: in addition to long-term holders and central banks, there are option speculators and investors just trying to capitalize on the growth that has already taken place, says Merkulov.

"It became the biggest one-day drop in more than 40 years, and a few days later the market showed one of the strongest rebounds since the 2008 crisis, and weekly realized volatility climbed above 90%," Merkulov recalled.

It turned out that the asset, which should serve as the anchor of the portfolio, began to behave like a cryptocurrency, the expert notes.

An additional signal came from the options market: the inherent expected volatility in gold rose to levels previously seen only in the 2008 and 2020 crises. "Fear" in gold has become disproportionate to the very image of this asset as a safe haven.

In March, the US-Israeli war against Iran and the ensuing spike in energy prices should have made gold a natural safe haven. But inflation risks grew, market expectations of the Fed rate cut were replaced by expectations of its growth, the dollar strengthened, US Treasury bond yields went up, and gold came under pressure. On March 23, spot prices for the metal fell to $4.1 thousand, losing more than 26% of the maximum.

"Gold has been let down not by its own nature but by the macro environment, in which the defensive asset is losing out to a stronger dollar and rising rates," Merkulov said.

The second story is long-term US Treasury bonds. Merkulov notes that they are often referred to as an almost risk-free asset, and he immediately stipulates that this is true only in one, rather narrow sense - the risk of default in the United States is minimal. But for an investor, another thing is more important: what happens to the price of the security as it approaches maturity.

And here the picture doesn't look serene at all anymore. Why?

Here's an example - the iShares 20+ Year Treasury Bond ETF (TLT), an exchange-traded fund for long U.S. government bonds. It is 99.98% Treasury bonds (as of April 20 this year). The rest is technical cash balances and service positions. But the key indicator here is different: the effective duration of the fund reached 15.35 years, says Vadim Merkulov.

It makes this instrument an asset with a high sensitivity to yield movements. The simple math is as follows: if the yield on long bonds rises by one percentage point, the price of a portfolio with a duration of about 15 years can fall by about the same 15%, even without the slightest hint of default, Merkulov explains.

In March, this risk manifested itself in full: the energy shock and a new wave of fears about a jump in inflation hit the global debt market, interest rates went up, and prices of long securities went down. Thus, the decline in TLT yields reached 4.89% on March 27. That's almost a year's worth of yield lost in just a few weeks.

This is where the main failure in investors' perception became apparent: They see U.S. government bonds "on display" and conclude that they are safe. However, in practice they "buy" not only an instrument from a reliable borrower, but also sensitivity to inflation, expectations on the Fed's policy and the risk that the protective asset will not help if the shock occurs not because of a downturn in the economy, but because of the rate of growth of prices and yields. In such a construction, formal reliability of the issuer does not save from quite real volatility, the expert summarizes.

The third story looks less obvious, but it may be even more important for the stock market than the first two, Vadim Merkulov continues. It is related to the software sector, which has long been considered almost an ideal form of quality growth. The subscription-based business model (SaaS), regular revenues, high profitability, low capital intensity and strong competitive position created a feeling that such companies pass through economic cycles easier than most others.

But in 2026, this very confidence became a vulnerability - the pressure came from artificial intelligence. Because of its development, the very logic of the SaaS model has come into question. If AI is able to replace some functions, automate workflow or quickly build an internal tool for a specific task, the market starts to look differently at the number of licenses sold, payment for a workstation (access to a terminal) and the value of a familiar interface.

These doubts in February this year cost the market $1 trillion in lost capitalization and led to the "soft-apocalypse," a massive market sell-off.

As a result, by the end of the first quarter of 2026, the iShares Expanded Tech-Software Sector ETF (IGV) had lost 24%. For a sector that was recently perceived as one of the most stable parts of the growth market, this is no longer just a correction - it is a revision of the investment approach itself, says Merkulov.

The story of Figma stands out, he adds. In the summer of 2025, it held a successful oversubscribed IPO - demand for shares exceeded supply almost 40 times.

Figma's management tried to show that AI could be turned into a new source of revenue by moving to a hybrid model with the sale of loans beyond the basic limits. But the market saw the other side of the issue: if AI is penetrating deeper and deeper into product and service design and development, where does the competitive advantage of the platform end and the risk of substitution begin? As a result, Figma's securities have lost more than 50% in value since the beginning of the year, with a decline of nearly 30% in March alone. Among the reasons were concerns about the sustainability of traditional subscription models, says Vadim Merkulov.

The reliability of an asset can no longer be determined based on what you already know about it, summarizes Merkulov.

In the case of gold, Treasuries and software makers and SaaS companies, the investor saw a familiar shell. But the blow came not from what was on the surface, but from what the market had for too long considered a secondary threat.

Merkulov is not alone here.

Recent reviews by UBS and China Merchants echo the same message - the label of a protective asset without an understanding of its risk mechanics no longer means much.

"Only the US dollar remains in the spotlight, but even this may be an exaggeration: its strengthening in the first days of the conflict in the Middle East was partly due to the mass closing of other positions, rather than pure demand for a protective asset," UBS analysts said.

This article was AI-translated and verified by a human editor