War Volatility Hits Markets — Why One CEO Is Buying the Dip

As geopolitical tensions between the United States and Iran rattle global markets and headlines warn about risks in private credit, Anna Rathbun, founder and chief executive of Grenadilla Advisory, says investors should resist panic and remain disciplined.

“Whenever there’s a geopolitical conflict and certainly a hot war like this, markets are going to react, but it’s actually a knee-jerk reaction,” Rathbun said in an interview with AInvest. “Markets tend to sell off when there’s a lot of fear and then discuss the details later.”

Rathbun, who previously served as chief investment officer of CBIZ Investment Advisory Services—overseeing investment strategy for a $73 billion wealth management division—launched Cleveland-based Grenadilla Advisory to focus on portfolios that combine public markets with alternatives such as private equity, private credit and real estate.

Her guidance to clients has been straightforward: stay focused on long-term objectives rather than short-term market swings.“Usually the conversation is really around holding on tight, ignoring the noise and making sure that they remember their goals and the time horizon,” she said.

War-Driven Market Shifts

According to Rathbun, current market behavior reflects heightened uncertainty but not outright panic among investors.“So far the markets have been in a certain pattern…upon the open there’s a steep sell-off and then during the day investors come in very, very slowly,” she said. “From a short-term time horizon perspective it doesn’t seem that people are running away.”

Still, she noted that traditional safe-haven assets have behaved differently than expected.“There is no safe place to hide right now not even in bonds,” Rathbun said. “Treasury yields are going up even gold is down. The only place that has been safe is in oil futures and a U.S. dollar.”

The dollar’s strength, she added, reflects investors seeking relative stability in U.S. assets during geopolitical turmoil.“The U.S. assets are usually seen as a safe haven,” Rathbun said. “Investors are actually coming into U.S. dollar as a safe haven.”

Despite the conflict, she believes U.S. equities may remain resilient over the longer term, in part because technological innovation—particularly artificial intelligence—continues to be driven by American companies.“There is a saying not to bet against the U.S. markets and I think that’s still the case,” Rathbun said.

Rathbun added that she is also using the recent market pullback to selectively add exposure for clients.“I am buying the dip,” Rathbun said. “Part of this is if clients have extra cash, whether it was because they wanted an opportunity to invest or there was cash coming in as income from the fixed income and credit component of it, I like to take some of that cash instead of reinvesting it into the bonds. I like to take it and look for new opportunities.”

Private Credit Concerns

At the same time, Rathbun said growing anxiety around private credit—fueled in part by headlines about fund redemptions—may be overstated.“I think the private credit worry…is overblown,” she said in the interview with AInvest.

Successful private credit investing, she said, depends heavily on manager selection and understanding that such investments are inherently illiquid.“You have to choose the right manager. You have to choose the right partner,” Rathbun said, adding that investors should treat private credit as “a long-term instrument because the underlying positions are illiquid.”

She also warned that the expansion of private credit funds into retail markets has created misunderstandings among investors unfamiliar with their structure.“The private credit world has rolled out these evergreen funds too quickly for the retail market,” Rathbun said. “People need to understand that these are not tradable bonds.”

In many cases, she believes recent redemption pressures are driven more by investor sentiment than deteriorating loan portfolios.“I think it is definitely a retail-driven redemption rather than investments going wrong in the portfolio,” Rathbun said.

Selective Optimism

Even as geopolitical risks threaten to push inflation higher—particularly if disruptions in the Strait of Hormuz continue—Rathbun said investors should analyze how those pressures affect different asset classes.“If you’re worried about inflation, equities is not where you should really worry. It’s actually bonds,” she said.

Her approach, she added, is to stay selective when positioning portfolios during volatile periods.“We have to think through the mechanics of how these events can influence the securities as well as commodities and understand where the risks are…positioning the portfolio accordingly.”