Round trip
For those running wealth portfolios, recent weeks have re-emphasised the importance of having more than one diversifier up your sleeve for when times get tough.
The equity and bond sell-off seen over this period has been, as of right now, pretty mild – and DFM portfolios have mostly held up well, too. All the same, the macroeconomic picture suggests the current challenges aren’t going to go away any time soon.
So our latest podcast is all about alternatives, and how they fit in to portfolios at the moment.
We noted last week that some of the most popular hedge fund picks within the DFM community have done a decent job of late. But while there’s more to alts than just hedgies, finding the right choices can nonetheless be pretty tough.
This week’s guest, Punter Southall Wealth CIO Tom Becket, says it can be “very hard to find alternatives that can fit into retail clients’ wealth portfolios” – unless, that is, you can find something “genuinely market neutral, or positioned structurally negative on other asset markets”.
That’s easier said than done, but as Becket goes on to say, there are still good options out there in most asset classes for those who know where to look. So the last resort of raising cash levels can remain just that – a last resort – for the moment.
The acid test for diversifying assets may be still to come, of course. While March 2020 was a good trial run for sharp sell-offs, the trials facing allocators today are somewhat different.
Inflation has returned as a genuine threat, which has obvious implications for bond positions. And if price growth does prove sustained, or if inflation simply remains at elevated levels, Becket thinks equity indices may struggle more than some suspect, too.
For a discussion of these issues and more – including a look at how supply chain dynamics might also impact portfolios in future – click here to listen on Acast, here on Spotify, and here on Apple Podcasts.
You can also take a listen to our previous shows via those same links. As ever, if you like the podcast, please subscribe or follow via your preferred provider.
