Permian Basin Equities: Strategic Energy Assets in 2026

PERMIAN PURE-PLAYS: WHY INDEPENDENT E&PS ARE EMERGING AS STRATEGIC EQUITY ASSETS

Permian Basin equities and independent U.S. shale producers emerging as strategic energy assets in 2026 — Chart of the Month: Independent Permian Basin producers are increasingly viewed as strategic hard-asset equities amid rising geopolitical uncertainty

Recent instability in the Middle East has once again reminded energy markets that not all oil barrels carry the same value. When nearly one-fifth of global seaborne crude flows through the Strait of Hormuz, even a limited disruption can rapidly lift the geopolitical premium embedded in oil prices. In that environment, investors are increasingly forced to distinguish between oil producers exposed to geopolitical uncertainty and those positioned far from it. In this environment, Permian Basin equities are increasingly attracting investor attention as strategically positioned energy assets.

That shift in perception directly benefits the Permian Basin.

Stretching across West Texas and southeastern New Mexico, the Permian has become the most important oil-producing region in the United States, accounting for roughly 45% of total U.S. crude production and more than 40% of domestic proved reserves. Producing close to 6 million barrels per day, the basin now rivals major OPEC nations in scale while offering something many international producers cannot: political security, rapid development cycles, and low-cost supply.

The strategic appeal of the Permian lies in the quality of its barrels. These are politically secure barrels, located well outside maritime chokepoints, with breakeven prices often in the low $30–40 per barrel range. Unlike offshore or conventional megaprojects that require years of development, shale wells in the Permian can be drilled and brought online in a matter of months. That gives operators an embedded option on higher oil prices: if crude remains elevated, production can be adjusted quickly without committing to long-cycle capital spending. This combination of low-cost production and geopolitical insulation has strengthened the investment case for U.S. energy equities.

For equity investors, however, the most compelling opportunity may not be in the integrated majors, but in the independent pure-play producers.

Large integrated companies such as Exxon and Chevron use the Permian as part of a broader corporate system, where upstream production often serves downstream refining and chemical operations. That diversification provides stability, but it also dampens direct exposure to rising crude prices.

Independent operators such as Diamondback Energy, Permian Resources or Devon Energy offer a different proposition. Without downstream hedges, they retain much greater sensitivity to commodity prices, allowing shareholders to participate more directly in oil price upside. In periods of geopolitical disruption, that operating leverage can translate into disproportionately stronger cash flow.

Importantly, today’s Permian independents are no longer the aggressive shale producers of the last decade. The industry has undergone a structural transformation. Where companies once pursued production growth at any cost, management teams now prioritize return on capital at almost any oil price. Instead of reinvesting every dollar into drilling, many producers now focus on maintaining production while directing excess free cash flow toward base dividends, variable dividends, share repurchases, and debt reduction.

This shift has fundamentally changed the investment profile of the sector. As a result, leading independent E&P companies are increasingly viewed as disciplined hard-asset equities rather than purely cyclical commodity businesses.

Rather than behaving like speculative growth companies, leading Permian independents increasingly resemble disciplined cash-return businesses. Even at oil prices near $70–80 per barrel, many can generate attractive free cash flow yields while still maintaining modest production growth. The result is an equity class that can deliver income, inflation protection, and commodity upside simultaneously.

Yet despite this improvement, valuations remain undemanding. Independent Permian E&Ps continue to trade at a substantial discount to the broader equity market and often at lower multiples than the integrated majors. Investors are effectively paying less for businesses that now have stronger balance sheets, better capital discipline, and a more shareholder-friendly approach than at any point in the shale era.

That valuation disconnect suggests the market may still be pricing these companies as old-cycle commodity producers rather than recognizing their evolution into strategic energy assets.

The broader macro backdrop only strengthens the case. In a world defined by persistent inflation, geopolitical fragmentation, and supply insecurity, low-cost domestic oil producers can provide a natural hedge against many of the risks affecting traditional equity portfolios. Their earnings are tied less to consumer demand or technology spending and more to the physical value of energy itself.

In that sense, independent Permian producers are no longer simply oil stocks. They are increasingly becoming hard-asset equities—businesses that combine real asset exposure with disciplined capital allocation.

For investors seeking exposure to rising geopolitical risk without taking direct commodity ownership, the best Permian independents may offer one of the more compelling opportunities in global energy today. In a market where security of supply is becoming as valuable as the commodity itself, the most attractive barrels may be the ones located furthest from conflict—and the equities most exposed to them may still be undervalued. In today’s environment, Permian Basin equities increasingly represent a differentiated source of portfolio diversification and inflation resilience.

Written by MAXIMILIEN MESTELAN

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This content is provided for information purposes only and does not constitute investment advice, an offer, solicitation or recommendation to buy or sell any financial instrument or investment product.

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Past performance does not predict future returns. The value of investments and the income derived from them may fluctuate and investors may not recover the amount originally invested. Investments involve risks, including possible loss of capital.

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Market Volatility Surge: How to Avoid a Perfect Storm in March 2026

March 2026: A Violent Wake-Up Call for Markets

March 2026 is shaping up to be one of the most challenging months for financial markets in recent years. Once again, March delivers. Global equities, as measured by the MSCI World Index, fell by -8.5% over the month.

While the correction may not come as a complete surprise—markets had felt increasingly fragile in recent months—it highlights a key point: geopolitical risks had been significantly underestimated, even if they are inherently difficult to predict. More importantly, the period was marked by a sharp and simultaneous rise in market volatility across regions and asset classes.

A Broader Market Shock

What truly defines this period is not just the equity drawdown, but the magnitude of moves across all asset classes. The chart highlights the evolution of implied volatility across major asset classes over the past five years, with all series rebased to 100 at the starting point.

In March 2026, volatility has surged simultaneously in:

US equities
US Treasuries
EUR/USD exchange rate
Commodities
Gold

Compared to five years ago (base 100), all these markets now exhibit significantly higher implied volatility levels, illustrating a rare synchronization of market volatility across traditionally uncorrelated segments.

What’s Different This Time?

The current spike in volatility recalls the 2022 shock triggered by the war in Ukraine and the ensuing inflation surge. However, this episode is more sudden and more pervasive, as markets were emerging from unusually low volatility levels—especially in rates, currencies and commodities. Geopolitical tensions, particularly those affecting energy markets and supply chains, have further intensified the move, amplifying cross-asset market volatility.

No Safe Haven

Traditionally, periods of equity market stress are partially offset by gains in defensive assets such as government bonds or gold. This time, however, these traditional hedges have failed to provide protection. Peak to trough, gold lost about 18% intramonth, while an investment in 10-year US Treasury bonds would have resulted in a loss of more than 4% over the same period.

In such environments, where diversification benefits break down, a low volatility investment strategy becomes particularly relevant, as it aims to limit drawdowns while maintaining more stable return profiles.

The Case for Diversified Hedge Funds

Yet, even in such challenging conditions, not all strategies are equally exposed. As in previous periods of market stress, diversified multi-strategy hedge funds have demonstrated their ability to navigate volatile environments.

This is precisely the approach implemented in our low volatility multi-strategy investment approach. Drawing on more than 25 years of experience, the strategy is designed to deliver steady, uncorrelated returns across market cycles.

While global equity markets are down approximately 4.0% year-to-date, the strategy remains in positive territory. Over the past five years, it has delivered an annualized return of around 5.8%, with low volatility of approximately 2.0% and no meaningful correlation to equity markets.

Some months may feel uneventful in terms of performance. But in periods like the one we’ve just experienced, capital preservation and stability become invaluable. Ultimately, managing market volatility is not only about performance, but about ensuring resilience across market regimes. Sometimes, the real luxury in investing is simple: being able to sleep at night.

Written by Cédric Dingens

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only.

NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation.

Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors.

Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request.

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Top Swiss Independent Asset Managers 2026: NS Partners Recognized by Citywire

NS Partners Recognized Among Top Swiss Independent Asset Managers in Citywire 2026 Ranking

NS Partners is pleased to announce its inclusion in the Citywire Switzerland Top 50 Swiss Independent Asset Managers 2026, a recognition highlighting firms that play a leading role in Switzerland’s independent wealth and asset management industry.

Each year, Citywire Switzerland publishes its report on the Top Swiss Independent Asset Managers, identifying firms distinguished by the strength of their investment capabilities, the expertise of their teams and their ability to deliver long-term value to clients. The ranking provides an overview of some of the most respected Swiss independent asset managers operating in today’s competitive wealth management landscape.

Being included in this year’s selection reflects NS Partners’ continued commitment to disciplined investment management and client-focused portfolio solutions.

Citywire’s Top Swiss Independent Asset Managers Report

Founded in 1964, NS Partners has built a long-standing reputation as a Swiss independent asset manager focused on active investment management and long-term capital growth. Our investment philosophy combines deep fundamental research with a global perspective, enabling us to identify high-quality investment opportunities across market cycles.

Today, NS Partners serves private clients, family offices and institutional investors worldwide, offering tailored portfolio solutions aligned with each client’s objectives and long-term investment horizon.

Our inclusion among the Top Swiss Independent Asset Managers 2026 reflects the dedication of our teams and the trust placed in us by our clients and partners. We thank them for their continued confidence and support.

The full Citywire Switzerland report can be accessed here.

About NS Partners

Founded in 1964, NS Partners is an independent asset management firm providing active investment strategies and tailored portfolio solutions to private clients, family offices and institutional investors worldwide. With a global investment perspective and a disciplined fundamental research process, the firm focuses on long-term capital growth and high-conviction investment strategies across international markets.

For more information about our services and expertise, please don’t hesitate to contact us.

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of the date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only.

NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instruments referred to in this document.

This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities.

References in this document to investment funds that have not been registered with the Finma cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request.

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Why Cat Bonds Are a Powerful Fixed Income Diversifier in 2026

THE CASE FOR CAT BONDS AS A FIXED INCOME DIVERSIFIER

What are cat bonds?

Cat bonds (short for catastrophe bonds) are fixed income instruments used to transfer risks related to natural catastrophes from reinsurance companies to capital markets. As part of the broader insurance-linked securities (ILS) universe, cat bonds allow investors to access returns driven by insurance premiums rather than traditional financial market risks.

How do cat bonds work?

Instead of being used for capex like for usual corporate bonds, the proceeds are placed in a collateral to be readily available to cover insured damage resulting from events such as a hurricane in Florida or earthquake in Japan. If such an event does not occur over the life of the bond (usually 3 years), the proceeds are returned to the investor with an annual coupon made of the collateral interests plus the spread linked to the perceived risk of insurance from the related natural catastrophe (in other words, the “insurance premium”). Because returns are linked to natural events rather than economic cycles, cat bonds tend to exhibit low correlation with equities and traditional credit markets.

Performance Comparison: Cat Bonds vs Investment Grade Credit

Over the past five years, a traditional fixed income allocation (excluding Cat bonds) would have returned a cumulated performance of 13.73%, or 2.60% in compound annual growth rate. This is using the Bloomberg Global Aggregate Credit 1-5 years index hedged in USD, which already in itself would have been a wise choice as it outperformed the more traditional Global Aggregate index, thanks to its shorter duration and higher carry.

However, introducing a 12.5% allocation to Cat Bonds (equivalent tto 5% within a 40% fixed income / 60% equity portfolio), would have increased cumulative returns to 19.07%, representing an additional 5.34% of outperformance. Annualized returns would have risen to 3.55%. Importantly, this excess return was achieved with similar volatility.

Why Cat Bonds Improve Risk-Adjusted Returns?

The key driver behind this improvement is diversification.

Because cat bonds are very much decorrelated from financial markets. In fact, the weekly correlation between cat bonds and the MSCI World over the last 5 years was just 0.14 vs 0.37 for the above-mentioned credit index. Even the correlation between the cat bonds and the investment grade credit index was only 0.17 during the same period. This helps explain why, in terms of risk-adjusted return, adding some cat bonds to a fixed income allocation would have been a good decision.

They provide exposure to an uncorrelated asset class, helping smooth portfolio volatility while maintaining attractive yield levels.

Are Cat Bonds Still Attractive Today?

Today, cat bonds continue to offer compelling fundamentals. They offer a yield to maturity of 7 to 8% with no duration and no credit exposure, although with different risks uncorrelated with financial markets. By contrast, the referenced investment grade index currently offers around 4.6% yield to maturity, with 2.7 years of duration and A- average credit quality.

From a technical perspective, the outlook also supports cat bonds. Over the next couple of years, we expect massive supply of debt in the investment grade universe as issuers like Oracle need to finance their enormous AI capex. With developed market governments also having to refinance ever growing fiscal deficits, it is unclear how much demand will be left to meet the new supply of investment grade debt corporate bonds. This expanding debt supply may pressure traditional credit markets, reinforcing the case for diversifying fixed income exposure with alternative sources of return such as catastrophe bonds.

Manager Selection matters

One word of caution: Cat bonds are a specialized and complex asset class. Manager selection is therefore critical. Investors should prioritize experienced managers with strong underwriting capabilities, proven track records, and sufficient agility to exploit opportunities in the developing secondary market of this approximately $65bn sector.

Written by Julien Baltzinger

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only.

NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation.

Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors.

Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request.

China Narrows The AI Capability Gap

CHINA NARROWS THE AI CAPABILITY GAP

This month’s chart illustrates one of the most significant developments in the global technology landscape: the rapid rise of China’s frontier AI capabilities and the narrowing performance gap with the United States. The graph tracks the top-performing AI model from each country between mid 2023 and late 2025. While the United States maintains a slight lead throughout the period, the visual trend is unmistakable: China is accelerating quickly, with breakthrough moments that reshape expectations about global AI competition.

The most dramatic shift occurs in early 2025 with the release of DeepSeek R1, highlighted in the chart. This model marks a turning point not only in China’s domestic AI progress but also in the broader perception of what Chinese companies can achieve under resource constraints. According to the European Union Institute for Security Studies, DeepSeek R1 demonstrated performance on par with leading American models while using far less computing power and dramatically lower training costs, challenging the assumption that semiconductor export restrictions would slow China’s progress. This breakthrough signals a structural shift: algorithmic efficiency and model design have become strategic strengths within China’s AI ecosystem.

Stanford University’s 2025 AI Index report supports the trend displayed in the graph, noting that China has significantly closed the performance gap with the United States, even though the U.S. continues to produce more frontier models overall. Chinese models such as DeepSeek R1 now rank very close to top U.S. systems on independent benchmarks including LMSYS. The chart reflects this convergence clearly, as the red line representing China rises sharply from 2023 onward, narrowing the distance with the U.S. trajectory.

DeepSeek R1’s impact also stems from its unprecedented efficiency. Reports indicate that the model was trained for approximately $6 million, far below the estimated $100 million-plus investment required for models like OpenAI’s GPT-4. This efficiency not only enabled rapid iteration but also disrupted global markets, with U.S. technology stocks experiencing significant volatility following the model’s release. The economic effects reinforce what the chart shows technologically: China is no longer simply following developments in AI but increasingly shaping the competitive landscape.

Beyond individual models, China’s broader AI ecosystem has strengthened in ways that help explain the steep upward trajectory seen in the graph. Chinese companies have embraced open-source development, improving adoption and accelerating innovation cycles. They have also benefited from strong government support, growing domestic talent pipelines, and an expanding volume of high-quality research output. According to Recorded Future’s 2025 analysis, Chinese generative AI models now trail U.S. counterparts by only three to six months, a remarkably small window given earlier expectations and one that aligns directly with the chart’s near convergence by late 2025.

Overall, the chart captures a moment of profound technological shift. While the United States retains a narrow lead in frontier AI models, China’s rapid progress—driven by efficiency, innovation, and strategic investment—has brought the two countries closer than at any previous point. The upward movement of China’s capability line is not just steep; it is indicative of a maturing ecosystem capable of producing globally competitive models despite resource constraints and external pressures. As the pace of development continues, the global AI landscape in 2026 and beyond is likely to be more multipolar, more competitive, and more dynamic than ever before.

Written by Gabriele Casati

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request.
© NS Partners Group

Soooo long equities… and, So long, Mr. Buffett.

So long Equities — Sources: NS Partners, Bloomberg

As shown on the chart of the month, 2025 has been a positive year for investors; this chart simply illustrates the performance of the euro share classes of an equal-weighted portfolio composed by all the products we manage at NS Partners with AuM above € 100 million equivalent. The return of this theoretical portfolio would have been above 12%. It includes alternatives (Haussmann, Lynx, Pendulum), Asset Allocation (Horizonte, NS Balanced), Equities (Stock Selection, Cleaner Energy, Swiss Excellence, Quality Trends) and Convertibles. The beta of this portfolio would have hovered around 0.6, hence a “balanced plus” profile.

It was almost impossible to lose money in 2025 despite multiple perils. Investors embraced the positive mood; institutional cash levels stand at 3.3%, a record low, while positioning is soooo long equities, with exposure close to record high. As the adage goes, markets “climbed the wall of worries”.

Speaking of adages, 2025 has been marked by an important event for all equity markets; Warren Buffett finally decided to retire. Beyond his formidable track record as an investor, Mr Buffett was also a never-ending source of inspiration with his famous quotes. Let us pay tribute to him and review some of the most emblematic, and how they applied to markets in 2025:

“In the business world, the rearview mirror is always clearer than the windshield”. So true as the AI capex-related equity boom after the tariffs mess looks logical today, but was hard to bet on in April.

“Be fearful when others are greedy, and greedy when others are fearful”. A very famous one, but a mixed picture in 2025 as it indeed paid off to be greedy among fear in April, but it did not pay off to be fearful among greed in H2.

“Never ask a barber if you need a haircut”. Always true; don’t listen to self-declared experts on the internet telling you to go long or short the dollar, or Bitcoin, Gold, Nvidia or Silver or whatever. Make your own research and assess the risks you’re ready to take.

And my two favourites:

A rising tide lifts all boats.

This has been very accurate in 2025, with many unprofitable businesses posting spectacular returns on the back of global enthusiasm around AI.

Only when the tide goes out do you discover who’s been swimming naked.

One of his most repeated warnings, which resonates strongly with the turmoil surrounding Oracle or Coreweave on the credit market, both companies running negative free cash-flow and deploying massive capex, while no real pain was felt by the Mag-7.

The last one could be considered as an advice for the year to come.

“Predicting rain doesn’t count. Building arks does”. No one knows what happens next; but good portfolio management consists in investing in a range of asset classes that do not correlate too much with each other. In the long run, the management of risks is paramount. Another great thinker, the late baseball star Yogi Berra, confirmed this relentlessly, stating that: “It’s very difficult to make predictions, especially about the future”.

Happy New Year!

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request.
© NS Partners Group