While short-term uncertainty is inevitable, sticking to a disciplined process should help us avoid getting whipsawed by market volatility.
MyFolio risk parameters ensure that our portfolios don’t deviate from their long-term positioning and remain true to their risk targets.
Although the risk of recession has increased, the recent delay in trade tariffs provides a window for negotiations and potential positive news flow over the next 90 days. Additionally, central banks have a range of fiscal and monetary tools at their disposal to support the economy.
Meanwhile, we have four essential MyFolio guidelines for navigating market turmoil:
1. Think long-term
Historical data strongly supports the notion that significant market setbacks are often followed by robust returns over cash over the medium term. While we are certainly not out of the woods yet, this long-term perspective is essential for weathering short-term market fluctuations. By focusing on the long-term outlook, the MyFolio portfolios are positioned to benefit from eventual market recoveries.
2. Diversification is key
In unpredictable market scenarios, diversification becomes even more critical. As no one can accurately predict the primary beneficiaries and those adversely affected by imposed tariffs, it's best to maintain a diversified portfolio across asset classes, sectors, and stocks.
Our underweight position in the US has positively impacted our relative performance.
MyFolio's diversified approach, including our underweight position in the US compared to the MSCI World, has positively impacted our relative performance year-to-date. We continuously monitor our risks and exposures to ensure optimal portfolio balance.
3. Avoid market timing
Attempting to time the market can be incredibly challenging and often counterproductive. Investors who try to time their entry and exit points risk missing out on significant market rebounds, as seen recently when tariffs were delayed. Staying invested through market ups and downs is generally a more effective strategy for long-term growth.
4. Rebalancing is a good discipline
In the MyFolio funds, exposures are rebalanced to ensure portfolios remain within their risk objectives. By reducing exposure to asset classes that have performed well and rotating into those that have underperformed, the risk objectives of the portfolio are preserved. This strategy aids in managing current risks and positions the portfolio for improved long-term performance.
More about MyFolio
MyFolio offers a spectrum of solutions with a range of investment styles and risk levels.
For more information about the MyFolio fund family, visit our website or if you have any queries, please don’t hesitate to contact your local business development director.