Close Menu
Fund Focus News
    Facebook X (Twitter) Instagram
    Trending
    • Mutual Fund Promotion and Initial Public Offer expense allowed as business expense
    • BFSI Mutual Funds AUM Surges 37% to ₹48,000 Cr: Rediff Moneynews
    • SBI mutual fund launches AI-powered ‘SmartAssist’ on whatsApp, ET CIO
    • Innovator Launches Industry’s First Dual Directional Buffer ETFs™
    • Hyprop sells half of Hyde Park Corner
    • Top 5 Equity Index Funds With up to 195% SIP Return in 6 Months: Rs 25,000 monthly investment in No.1 defence fund has skyrocketed to Rs 2,06,245
    • Siebert Financial Joins Russell 2000 Index, Strengthens Growth Strategy with Tech Investments
    • Allstate Corporation Digital Transformation Strategy Analysis Report 2025
    Facebook X (Twitter) Instagram
    Fund Focus News
    • Home
    • Bonds
    • ETFs
    • Funds
    • Investments
    • Mutual Funds
    • Property Investments
    • SIP
    Fund Focus News
    Home»Investments»Protecting Investments Amid Geopolitical Storms
    Investments

    Protecting Investments Amid Geopolitical Storms

    August 9, 2024


    Beyond The Headlines: Protecting Investments Amid Geopolitical Storms

    When storms blow up, investors want to be on the most stable, robust vessel they can find, and the same applies to investing in volatile times. The author considers a few ideas.


    In these uncertain economic and tense geopolitical times,
    safeguarding investments is very much on the agenda. To discuss
    the main approaches is David Absolon, investment director at

    Handelsbanken Wealth and Asset Management
    (more on the author
    below).



    David Absolon

    The editors are pleased to share these views; the usual
    disclaimers apply to views of outside contributors. Email
    tom.burroughes@wealthbriefing.com
    if you wish to respond. 


    Financial markets can be unpredictable at the best of times but
    navigating them during periods of geopolitical risk can prove
    particularly challenging. Given the current climate, shaped by
    armed conflict in Europe and the Middle East, major elections
    across countries collectively representing 40 per cent of the
    world’s economy, and the possible threat of a trade war between
    the US, Europe and China, it’s safe to say risk remains
    elevated. 

    Should this environment worry investors, and how can we manage
    associated risks within our investment strategies? 

    Given their diverse nature, there is naturally no “silver bullet”
    when building investment strategies to account for geopolitical
    risks. Using a combination of diversifiers gives us the best
    chance of cushioning investment strategies, should risks become
    reality. 


    Bonds

    The current interest rate environment has seen more aggressive
    hikes than the last four decades, and with bond prices having
    fallen, yields have leapt up to around 4.4 to 5 per cent. The
    upward move in bond yields has put them back into contention when
    it comes to the power of diversification. Should geopolitical
    risks unfold, the expectation would be for yields to fall, and
    the market value of bonds to rise.


    Specialist protection strategies

    Specialist financial products have essentially been created to
    act as insurance for investors looking to guard against risk.
    “Tail-risk protection” is one example of a specialist financial
    product – designed to provide returns in the event of a sudden
    and meaningful market downturn. As with most kinds of insurance,
    you will pay premiums but will not receive anything in
    return. 


    However, when a meaningful and sudden enough downturn takes
    place, the insurance will kick in and the premiums paid will
    ultimately be worthwhile. It does, however, require a very
    specific set of events to produce returns which justify holding a
    position for an extended period. Covid-19 was one example of a
    crisis which triggered dramatic enough falls in the stock
    market in a very short space of time, for tail-risk protection to
    come into full effect. They still form part of the arsenal, but
    less so given what has happened to bonds, as we now get paid to
    wait in bonds until the full diversification properties are
    required. 


    Gold

    Gold is unarguably the best-known safe haven in financial
    markets. While often a good hiding place during times of market
    turbulence, long-term performance would suggest it is an
    unreliable “port in a storm.” 


    Gold outperformed during the 2008 financial crisis for example,
    but from a long-term perspective, it has sometimes not provided
    the safe haven that investors would have hoped for during
    inflationary, or deflationary, times. Placing a value on gold can
    be very difficult, which poses a problem. This is because gold
    does not produce a yield, in the way that bonds do, and supply
    and demand dynamics are volatile.  


    Despite this, it remains a useful diversifier during times of
    heightened geopolitical risk. Alternative options, such as hedge
    funds, have been viewed previously as a panacea for diversifying
    investment portfolios, but overall performance has dwindled since
    2008. Bearing this in mind, gold most certainly has a place in
    multi-asset portfolios.


    US dollar

    The US dollar is another familiar asset for diversification, and
    somewhat more reliable in the long term than others. Central
    banks and major financial institutions around the world hold it
    for international transactions, or as a secure store of value.
    Over recent years, there has been widespread speculation over the
    dollar’s status as the go-to reserve currency, but these concerns
    have never come to fruition. Over the short term at least, the
    dollar is likely to maintain its status. 


    While there is no one-size-fits all approach, a well-crafted,
    diversified strategy can help safeguard our investments.
    Continuous monitoring, adaptability, and a long-term perspective
    remain essential. As the global landscape evolves, so too should
    the strategies employed.




    About the author


    David Absolon is investment director at Handelsbanken Wealth
    & Asset Management, where he manages the defensive investment
    strategy and is co-head of fixed income research. He is also a
    member of the tactical asset allocation team and head of
    investment research. Prior to this, he was investment strategist
    at Barclays Wealth.



    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Telegram Email

    Related Posts

    Siebert Financial Joins Russell 2000 Index, Strengthens Growth Strategy with Tech Investments

    July 1, 2025

    Allstate Corporation Digital Transformation Strategy Analysis Report 2025

    July 1, 2025

    Yilgarn Iron Investments Pty Ltd finalise l’acquisition du complexe Yilgarn Hub Iron Ore auprès de Mineral Resources Limited

    June 30, 2025
    Leave A Reply Cancel Reply

    Top Posts

    Mutual Fund Promotion and Initial Public Offer expense allowed as business expense

    July 1, 2025

    Qu’est-ce qu’un green bond ?

    December 7, 2017

    les cat’ bonds deviennent incontournables

    September 5, 2018

    Quel est le rôle du service des impôts des particuliers (SIP) ?

    May 7, 2020
    Don't Miss
    Mutual Funds

    Mutual Fund Promotion and Initial Public Offer expense allowed as business expense

    July 1, 2025

    CIT Vs Sahara Asset Management Company Pvt. Ltd (Madras High Court) Madras High Court held…

    BFSI Mutual Funds AUM Surges 37% to ₹48,000 Cr: Rediff Moneynews

    July 1, 2025

    SBI mutual fund launches AI-powered ‘SmartAssist’ on whatsApp, ET CIO

    July 1, 2025

    Innovator Launches Industry’s First Dual Directional Buffer ETFs™

    July 1, 2025
    Stay In Touch
    • Facebook
    • Twitter
    • Pinterest
    • Instagram
    • YouTube
    • Vimeo
    EDITOR'S PICK

    Bill Ackman hopes to leverage public image to boost new investment fund

    July 16, 2024

    FIIs, Mutual Funds Up Stake In Suzlon During June Quarter

    July 22, 2024

    Wealth edition 26-Aug-2024 to september-1-2024

    August 26, 2024
    Our Picks

    Mutual Fund Promotion and Initial Public Offer expense allowed as business expense

    July 1, 2025

    BFSI Mutual Funds AUM Surges 37% to ₹48,000 Cr: Rediff Moneynews

    July 1, 2025

    SBI mutual fund launches AI-powered ‘SmartAssist’ on whatsApp, ET CIO

    July 1, 2025
    Most Popular

    ₹10,000 monthly SIP in this debt mutual fund has grown to over ₹70 lakh in 23 years

    June 13, 2025

    ₹1 lakh investment in these 2 ELSS mutual funds at launch would have grown to over ₹5 lakh. Check details

    April 25, 2025

    ZIG, BUZZ, NANC, and KRUZ

    October 11, 2024
    © 2025 Fund Focus News
    • Get In Touch
    • Privacy Policy
    • Terms and Conditions

    Type above and press Enter to search. Press Esc to cancel.