Weathering a financial shock: robust trumps resilience
Frank Jasper, Chief Investment Officer
3rd September 2018
The theme for this year’s Sorted money week is building financial resilience. Resilience is defined by the ability and speed taken to recover from a shock. This is a laudable goal.
Our job as active investment managers is to go one step beyond resilience. It’s to build portfolios that are robust in periods of market turmoil. If we do this well we can reduce losses, reducing the shock to your finances and hopefully calling for a little less resilience. The ability to recover is important but I would rather lose less in the first place.
As an active investment manager, we have a raft of tools at our disposal to build robust portfolios that help protect your wealth. These include:
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- Building robust multi-asset strategies – the building blocks of our multi-asset portfolios like KiwiSaver and the recently launched multi-asset class managed funds are a range of different types of assets, shares, property and fixed interest, based in New Zealand and around the World. This multi-asset approach puts robustness at the front and centre of portfolios. Each asset type, and often assets in different parts of the World, perform differently at different times. Very importantly some investments like fixed income tend to perform well when shares are performing badly. Having fixed income acts as an important protection in times of share market stress.