The Russia-Ukraine conflict caused major turbulence, at a time when the world was trying to recover from the consequences of the pandemic that broke out about two years ago. While the focus is on the loss of human life, there is also a significant impact on the global financial system and global markets with equities and bonds initially plummeting, followed by some recovery by the end of March. Commodity prices soared given that Russia is a key producer of several important commodities and a major energy supplier, covering a big portion of Europe’s energy needs. This contributed to a further surge in inflation and renewed worries that Central Banks world-wide will be forced to end their accommodative monetary policies, sooner than expected.
It is unlikely that the crisis will be resolved in the short term. This, coupled with high inflation expectations, is expected to maintain volatility elevated for an extended period. Here are a few points that may help you during such volatile times.
Keep a Diversified Portfolio
Diversifying is simply mitigating risk by spreading it across different types of investments, which will react differently to the same market event. By diversifying across regions, sectors and asset classes, investors can reduce their exposure to risks related to the Russia-Ukraine crisis. Diversification offers strong bear market protection as well. For example, when a country’s economy is growing, equities tend to perform better than bonds. But when the economy slows down, bonds often perform better than equities. As markets can be volatile and unpredictable, holding both equities and bonds reduces your risk of suffering a large loss due to changing market conditions. This is an example of diversification across asset classes. It can also be applied across geographical locations, industries or sectors, currencies, credit ratings (for bonds) and many more types of investments. Diversification doesn’t guarantee that you won’t lose money, but it will definitely help you achieve your long-term investment goals, while minimizing your risk along the way.
Consider investing in Ancoria’s multi asset funds
Each of these funds invests in a range of other mutual funds and ETFs that are picked by Ancoria’s investment committee to suit a particular level of risk. These funds are suitable for investors that do not have the expertise or appetite to set up their own fund strategy. They are very well diversified geographically and invest in various asset classes. Click here and choose your risk level to view all the details of the corresponding fund.
You may want to use Ancoria's investor profile tool to help you identify your investor profile and the right mix of stocks, bonds, cash and alternative investments for your investment horizon and risk appetite.
Stay tuned for new structured funds offered by Ancoria from time to time
Structured funds can offer yield enhancement for any portfolio on sideways markets. The funds offered by Ancoria invest in structured products of highly rated issuers and their maturity is predetermined. They typically provide a guaranteed or conditional coupon, an annual autocallability feature, conditional capital guarantee at maturity with one or more underlying index, like the Eurostoxx 50, S&P 500 and the OMXS 30. Depending on the investor’s preferences, structured funds may help reduce a portfolio’s risk exposure.
During the 1st quarter of the year, Ancoria launched two new structured funds, one in EUR and another in SEK. The funds were open for investment only for a short period of time and were subscribed in full. Stay tuned for new structured fund announcements in the coming months depending on the prevailing conditions in the stock markets.