After a brutal stock sell-off, the multi-asset approach is back in the spotlight. CNBC Pro asks experts how to invest to weather volatility – and make money in the process. The S&P 500 index rallied last Friday to start a seven-week losing streak, but it failed to mask the massive sell-off on Wall Street this year. The index is down about 13% this year, its biggest drop since 1970. Although the stock market has underperformed this year, multi-asset strategies may have performed better. Margaret Chan, global funding and foundation practice director at Cambridge Associates, told CNBC: “Stock markets globally are in double digits year-to-date, so having a strategic portfolio is important. Multi-asset will be very helpful for operational efficiency. The company has over $600 billion under management as of December 31. “To be clear, portfolios are still negative, but they’re less negative because assets like bonds, hedge funds, and private equity are often perform better than public stocks.” However, there is still a case for continuing to invest in stocks – especially for those who are inclined to invest for the long term. “If investors run away and find their way out now, there is a high probability that they will be kicked out of the market when the recovery is certain to happen,” Chan added. While Marcella Chow, global market strategist at JPMorgan Asset Management, believes the current levels provide “a reasonable entry point.” Diversification is key However, many investment professionals believe it is important for investors to have a diversified portfolio. “Time and a diversified portfolio are an investor’s strongest asset, especially during periods of high market volatility,” Chan said, noting that diversification through an investment strategy More assets will lead to higher risk-adjusted returns in the long run. While Thomas Poullaouec, head of multi-asset solutions for Asia Pacific at T. Rowe Price, said a broader asset allocation and diversification of investments would help mitigate the impact. volatility for the portfolio. He added: “Every investor should consider how time calms market movements, which can help put any concerns into context. Buy bonds? So, what should investors keep in their portfolios in an environment of high inflation and rising interest rates? “Longer-term investors concerned about inflation risks or looking for real growth may consider a mix of growth-oriented and inflation-sensitive assets in the analysis,” Poullaouec said. strategic additions to their portfolios,” said Poullaouec. He gave examples of real asset securities and TIPS. Real asset holdings are companies that own underlying assets, such as stocks of real estate or commodities, while TIPS refer to inflation-protected securities issued by the government. United States release. JPMorgan’s Chow believes the current environment also warrants a return to fixed income. She noted that the recent widening of corporate credit spreads, sound fundamentals and an expected low corporate default rate have put fixed income in “attractive territory.” Investment-grade bonds also provide coveted mitigation protection against slowing growth while providing investors with a steady stream of income, she added. Todd Jablonski, chief investment officer for Principal Global Asset Allocation at Principal Global Investors, is also positive on fixed income. “Appreciate the asset class for what it is – an anchor in your portfolio should not be over-fulfilled or overdone in an investor’s portfolio.” Real assets Real assets are another way to improve the inflation resistance of your portfolio, Jablonski adds. His company is currently overweight in terms of infrastructure, natural resources and commodities. He noted that commodities act as a hedge against inflation and geopolitics, while structural supply shortages suggest that commodities will outperform regardless of subsequent geopolitical developments. Brian Arcese, portfolio manager at Foord Asset Management, believes that real assets generally hold their true value well and will “almost always” perform best during periods of inflation. He also emphasized that real asset stocks – such as mining companies and manufacturing companies – are solid hedges against inflation, with stockpiles of other raw materials he loves. Arcese also emphasizes the importance of having cash on hand to make the most of any market drop. “We currently hold a meaningful cash position to take advantage of,” he added.
A person checks her phone at Wall Street near the New York Stock Exchange (NYSE) in New York on May 27, 2022.
Angela Weiss | AFP | beautiful pictures
After a brutal stock sell-off, the multi-asset approach is back in the spotlight. CNBC Pro asks experts how to invest to weather volatility – and make money in the process.