Managing Allocations in Volatile Markets

This report outlines eight key lessons for managing investment portfolios during volatile markets, emphasizing the importance of timeframe, diversification, and disciplined strategies.

Key Takeaways

• 1.Investment time horizons significantly impact risk; the probability of negative returns drops from 39% in the short term to 7% over 10 years.
• 2.Timing the market is generally a losing strategy; global equities had positive annual returns in 28 of the last 38 years despite intra-year volatility.
• 3.Diversification provides the 'staying power' needed to absorb emotional stress during market downturns and provides superior risk-adjusted returns.

Table of Contents

• Lesson #1: Remember that investment timeframe matters, and bear markets tend to be sharp but short-lived
• Lesson #2: Keep in mind that staying invested through volatile times proves beneficial in achieving long-term investment goals
• Lesson #3: Diversification is paramount during tough times
• Lesson #4: Understand that de-risking when market uncertainty is elevated comes with a cost and you should not compromise your diversification
• Lesson #5: A diversified allocation for the long and winding road ahead
• Lesson #6: Long-volatility strategies can help hedge risk exposure
• Lesson #7: Use volatility targeting to stabilise portfolio risk levels
• Lesson #8: Keep your emotions and biases under check

Document Preview

Page 1 of 5

Subscribe for full accessStart Free Trial