Realigning investment portfolios in uncertain times

Possibly the biggest blow since World War II, the coronavirus has created an environment where the only certainty is uncertainty. How long it will take the world to get over it no one knows. However, we are seeing some light at the end of the tunnel with restrictions gradually being lifted across continents.

Investment in these uncertain times might seem like fri­volous talk. But it may actually be the right time to rethink strategies, realign portfolios and review your portfolio situa­tion. While the present may seem bleak, there are nonetheless opportunities that will interest the savvy investor.

As investors try to pre-empt and see where the bottom prices of various investments might be, no one can predict nor foretell where the bottom prices for individual investments lie.

Can this ‘market correction’ be viewed as an opportunity to buy into markets at a ‘discounted’ price? Nothing more expensive than a missed opportunity – this is the ethos of survival that we need to follow in the current scenario.

The very nature of humanity is to survive and humans have always found ways to recover

Spreading risks makes more sense today than ever before, and a strategic realignment of your portfolio might open up new prospects. By spreading risks, collectively, investments will ‘cushion’ each other, even when not necessarily every move ends up to be a winner.

Let us extend this thinking into the context of markets and the companies within. Markets and companies have taken a blow globally. Adaptation is the name of the game here; it is not simply a game of survival of the fittest but whether you are able to, and how quickly you can adapt. Companies that managed to turn around their operations, thus creating an opportunity out of a threatening scenario, have better survival opportunities than counterparties who opted to do nothing.

There are winning decisions that will make sense across most scenarios. Then there are moves which, try as you may, will still be a betting game.

Phasing amounts invested and drip investing should be considered so as to reduce the ‘gambling’ effect, especially in un­certain times. Risks cannot be avoided – no one could have foretold the extent of disruption the pandemic would cause globally across various industries. But adequate precautionary mea­sures can help balance that risk.

These may be unprecedented times for the majority; however, this is not a dead-end road. The very nature of humanity is to survive, and humans have always found ways to recover and solutions for adverse situations.

Opportunities for investments might simply be round the corner. Talk to your trusted financial adviser, discuss strategic moves and portfolio realignment to maximise your returns and minimise your risks.

This article is not, and nothing in it should be construed as an offer, invitation or recommendation in respect of investment products or services offered by the BOV Group. The value of investments may go down as well as up and may be affected by changes in currency exchange rates. Past performance is not a guide to future performance.

Stephanie Agius, Bank of Valletta Wealth Management