Volatile Markets Stir Up A Storm For Investors
Market volatility is still a concern for investors who should hedge against the sharp swings by investing in multi-asset funds, says Barings Asset Management.
Their head of multi-asset investment, Percival Stanion, said: “Our research has shown there is volatility and dramatic changes between the best performing assets and the worst.
“This research illustrates why multi-asset funds have found favour with investors who want efficient investment vehicles.”
He added that equities will remain volatile through 2013 because of the political risks to the markets but the potential rewards in holding multi-asset classes could be huge.
He also said that most equities are looking undervalued when compared with government bonds and the best markets for performance this year, he pointed out, are likely to be in the Asia Pacific region.
Wealth preservation fund
Barings’ view of hedging against fluctuating markets is shared by fellow asset management firm Schroders which has launched a new wealth preservation fund.
Peter Beckett, head of international marketing at Barings, said they were expecting inflation to grow around the world and their clients wanted to protect against that.
He added: “The new fund will be an ‘all-weather’ portfolio which will preserve wealth and provide a real return.
“It will do this by identifying assets across a wide asset class range and it will not fit cleanly into a single category.”
Schroders is promising that the new fund, which launched at the end of January, will be ‘simple to understand’ as well as being flexible and is aimed at high net worth individuals.
Eurozone won’t collapse
One of the reasons financial experts fear politically-inspired volatility on the markets is down to the actions of the Eurozone governments but for one analyst those fears are unfounded.
Invesco Perpetual’s Adrian Bignell says the Eurozone will grow this year and that the worst is now ‘behind us’.
He said: “Contrary to widely held fears of a Euro collapse I believe the currency union will remain intact because it’s not in anyone’s interest for it to collapse, least of all Germany, which benefits from the weak currency.”
He adds that the Eurozone situation will improve because several member countries have introduced much needed labour reforms to help drive growth.
While the Eurozone is expected to do well, not all analysts are saying the same for the Chinese economy.
Raymond Ma, the portfolio manager for Fidelity’s China Consumer Fund, says the Chinese economy showed signs of recovery late last year but fears inflation will rise to affect assets.
He said that investors should remain cautious about China and pointed to the ongoing issue of the Japanese Yen depreciating which will have a serious knock-on effect for currencies across the Asia Pacific region.
He added: “Now that a new leadership is in place in China it is likely that deregulation across a range of industries will take place which will revitalise the nation’s private sector.”
Mr Ma also highlighted issues with a prolonged Eurozone crisis and the US bringing an early end to its quantitative easing policy.