But the problem remains: how to price or hedge such risks?
Poring over market performance since 1900 can offer some counter-intuitive results. Historical data from the Credit Suisse Research Institute shows the best year for world stock markets in terms of real rate of return was 1933, while the worst was in 2008––despite progress towards globalization.
In fact, on average, over the past 100 years, the premium attached to periods of growing globalization is around one point of the price-to-earnings ratios on equities, according to Barings. While there are many knock-on effects from fragmentation that are hard to quantify, that valuation gap appears limited.
And hedging against geopolitical threats in today's environment can also carry costs and risks. Henderson's O'Connor said that while buying oil was once an obvious hedge against conflict in the Middle East, the recent commodities slump, with crude near 6 1/2-year lows, underscored the unpredictability.
So the likelihood is that even if headlines get worse, it will take a lot more to unnerve global markets.
"So far, the spillovers have been quite contained," said O'Connor.