After several years of steady, and generally upward growth, 2018 has brought more volatility to stock markets. At the time of writing, the FTSE 100 has fallen between 6-7% in 2 weeks to just below 7,000.
Too much volatility worries investors. Boring and steady growth is very welcome when it comes to our pensions, ISA’s and the like. In the worst case scenario, an investor may bail out at exactly the moment when the doom and gloom is at its worst.
You might be surprised then to know that Investment Managers generally welcome volatility?
The golden rule is to buy low and sell high. No different to any other goods that you may trade in. Today markets are offering the opportunity to buy when prices are low, then hold and wait. The fund managers utilised by True Bearing had sold off portions of their investments prior to recent falls, waiting with the cash, for such a good buying opportunity.
The Stock Market
A stock market may end a 12 month period at the same level it started. Some intervening volatility though, will enable the active fund manager to make money. By contrast, a ‘tracker fund’ just follows the index, and would not have shown any final gains in this example.
Active investment management has served our clients well over the last 15 years. Our managers spread the risk by investing in several asset classes (eg, equities, corporate bonds, cash, property, government bonds, targeted absolute return,) simultaneously.
By calculating carefully how these asset classes react against each other, they can create portfolios of funds that typically co-ordinate with an investor’s needs. So cautious investors can have their cautious portfolios. Those with a medium or higher risk profile can do likewise.
If you would like to speak to one of our Independent Financial Advisers, please complete our enquiry form or call 01257 260011