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The Tempest: Investing through a sea-change

Finally, there’s the inequality puzzle. The rich are wealthier, more famous, and more powerful than ever. But at the same time, many others in society are sliding back into poverty. Eventually, this gap in incomes will come to a head. Are billions of pounds in a bank account any help when millions of people are marching in the streets?

I haven’t even started on some of the wilder catalysts for sea-changes – space travel or artificial intelligence (or anything else Elon Musk is thinking about) – but even without them, investors are likely to have their work cut out.

A reliable ship, the right crew, and an alert captain

My favourite analogy for the changing investment environment is that we’re going from a lake-based regime to an ocean-based regime.

Lakes are reasonably stable places to sail. Dangers are limited (although not non-existent), surprises are rare, and you’re usually not too far from shore. Oceans, as Shakespeare knew, are much more dramatic – and navigating them requires a different approach.

An ocean-going ship must be designed to be sturdier, and nimbler, and more resistant to extremes. Its crew must be prepared to deal with more complicated manoeuvres, and to be out of sight of land for long periods of time. And its captain must be more alert, more focussed, and be prepared to change course if necessary to get there.

Lots of model portfolios have only ever been sailed on the tranquil lake waters which followed the 2008 financial crisis. And for the sea-changes ahead, advisers need to ask some questions.

Have they built their ship in the right way, with a robust asset allocation designed with the rigours of the ocean in mind? Do they have the right crew, with the fund managers they’ve chosen to populate the asset allocation? And, as captain, do they have the capacity to devote extra time and focus to the investment outlook?

We speak to a lot of advisers who are asking exactly these questions. At 7IM, we’ve been building ocean-going portfolios for nearly twenty years, and model portfolio versions for over a decade. We’re ready for the Tempest when it comes.

Ben Kumar is Senior Investment Strategist at 7IM, an investment management firm which has been running model portfolios – both their own, and on behalf of advisers - for over a decade. Find out more about how they could help your business at

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