Amid escalating tensions in the Middle East, Bo Bejstrup Christensen and his team at Danske Bank Asset Management have put their tactical asset allocation (TAA) on hold, stepping back from active positioning and moving to a neutral stance across all tactical risk exposures. “Right now, everything boils down to oil prices, and ultimately that will be driven by what happens with the war,” he says, adding that “we are not experts, and we do not have a direct line to Washington.”
Tactical asset allocation aims to generate incremental returns by dynamically adjusting exposures around a long-term strategic benchmark, typically guided by macroeconomic signals such as growth, inflation, and monetary policy. Under normal market conditions, Christensen, Head of Macro and TAA at Danske Bank Asset Management, argues that this framework can create excess returns by shifting across asset classes in response to evolving macro expectations. However, the current geopolitical backdrop has materially undermined the reliability of such signals.
“Right now, everything boils down to oil prices, and ultimately that will be driven by what happens with the war. We are not experts, and we do not have a direct line to Washington.”
Bo Bejstrup Christensen, Head of Macro and TAA at Danske Bank Asset Management.
“We are neutral in all of our tactical risk-taking as of the end of last week, and we will not re-engage until we have a clearer indication of what is happening with the war in the Middle East,” says Christensen in a video update. At the moment, markets are entirely driven by developments in the region. “We do not believe we have a competitive edge in forecasting those outcomes, so we have closed our tactical risk,” he adds. “If we see evidence that the war is either moving in one direction or the other, we will reopen tactical positions again. If the war is about to dial down, then we will most likely return to our very positive and optimistic view on equities and on falling interest rates.”
“If the war is about to dial down, then we will most likely return to our very positive and optimistic view on equities…”
Bo Bejstrup Christensen, Head of Macro and TAA at Danske Bank Asset Management.
Christensen previously managed a multi-asset long/short macro hedge fund within Danske Bank’s asset management division. In his current role as Head of Macro and Tactical Asset Allocation, he oversees a Global Tactical Allocation strategy with approximately €1.9 billion in assets under management. The fund allocates dynamically across global asset classes, including equities, fixed income, currencies, and money market instruments, within a flexible, top-down tactical framework.
“If our expectations materialize, 2026 could still be a good year for financial markets,” Christensen concludes. “In the short term, however, we have paused our tactical asset allocation. Right now, financial markets are completely dependent on developments in the war in the Middle East and oil prices, and this is not a development we are particularly equipped to predict.”
