When Popeye was between a rock and a hard place, he turned to spinach, the supplement that strengthened him and allowed him to get out of trouble.
Faced with the threat of a new economic recession, investment portfolios need their own spinach to get out of the jam in which they may be involved. Here are some key recommendations for managing the investment policies of your portfolios:
- Experts say that more than 90% of the variation in portfolio returns depends on the correct strategic allocation of assets. Faced with such a changing environment, rebalancing the portfolio is crucial so as not to be so exposed to market movements.
- Suppose your portfolio is made up of half stocks and half bonds. If one performs better than the other, you should periodically readjust this portfolio to stay aligned with your investment strategy and policies.
- What if your goal is not to maintain balance? You can also adapt the investment percentages that make up the portfolio, depending on the market situation. Tactical asset allocation will allow you to stay in tune with the global situation.
- The key is in the dynamism. Investment diversification should be consistent with economic and market conditions. Not all assets perform equally in rising and falling markets.
Finally, we tell you the central component of spinach: in times of recession or slowdown in the economy, it is necessary to resort to investments that have a low correlation with the performance of the market. Alternative investments take advantage of inefficient markets, making it the perfect strategy in times of turbulence.
These assets are often focused on inefficient markets. These investments are classified into five types of assets: liquid alternatives, private equity, credit, real assets and hedge funds. The perfect supplement to take advantage of the economic slowdown announced by the World Bank.
By means of these investment alternatives, you will be able to reduce your exposure to market fluctuations. This will be the spinach that will lead you to have a better risk-environment ratio so as not to run into trouble with your investments.
Heinsohn Business Technology has an investment suite that helps manage the diversification of its portfolios.