The Multi-Asset Investment Portfolio: Year-End Special: Let Your Multi-Asset Investment Portfolio Take the Wheel in 2023 | Jobs Vox


In the year As we headed into 2022, we could not have imagined that the year would bring the biggest military offensive since World War II, the first real global energy crisis, global inflation not seen since the 1980s, and a 14-year relief. A long-term reduction program. But he did. The result was uncertainty. a lot of.

In the year Moving into 2023, the Russia-Ukraine crisis, the direction of inflation, and the Federal Reserve’s monetary policy are likely to be major influencers of financial markets. No one can say for sure how these will play out and what macroeconomic impact they will have. But one result is clear: market volatility.

Equity markets are bracing for tough times as the global economy stands in the midst of one of the fastest and most powerful global recessions ever. Debt markets have their own ups and downs and interest rates are rising and businesses and governments are seeing their creditworthiness questioned. Gold markets will continue to be pushed and pulled by economic downturns and geopolitical developments on the one hand. All of this will only get worse if inflation turns out to be stickier than expected or another geopolitical flashpoint emerges.

Should this worry investors? Volatility is the same as risk. Which is not. Volatility refers to changes in the value of an investment, while risk is the possibility of permanent capital loss in that investment. So volatility does not deter long-term investors. Instead, they use it to their advantage by holding a diversified portfolio and adjusting it regularly. how about? While the lower risk of decline due to imperfectly matched asset classes is often cited as an advantage of holding multi-asset portfolios, the potential for higher risk is not as prominent. But by buying low and selling high, a diversified portfolio can capitalize on asset class cycles and positively increase the investor’s returns. A case in point is the spectacular and pandemic stock market correction in February-March 2020, which could have been dealt with by increasing allocations to equity stocks at the time before the markets staged their spectacular comeback. Now, while this strategy may sound smart and attractive, it is not very easy to execute. That’s because these seemingly magical highs and lows are hard to identify. Especially since most investors don’t have the time, knowledge or inclination to track and interpret the markets. And even if it is identified, human biases will get in the way. It’s natural to panic when markets are falling or flying high.

Multi-asset mutual funds that invest in equity, debt and gold offer a solution to this twofold problem. A research-backed, disciplined and timed asset class is a deterrent to vulnerability. To make the deal even sweeter, their structure allows them to move in and out of securities tax-free, passing the savings on to investors in higher returns. In contrast, when investors hold separate equity, debt and gold funds, rebalancing carries costs such as tax events and exit loads. These can add up over time and interfere with the integration process.

With everything going on in the world, the financial markets are going to be a rough ride going forward. So, sit quietly in the gun seat and belt out a multi-asset investment portfolio.

(Ghazal Jain is a fund manager at Quantum Mutual Fund)


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