FUND IN FOCUS 11
„ Efficient diversification is about identifying truly uncorrelated positions able to deliver through all market environments. Asbjørn Trolle Hansen , portfolio manager at Nordea Asset Management
less impacted by current circumstances relative to the broader market. In addition, we know many in- vestors have long had concerns about elevated index valuations. Again, we see strong valuation support, as our Stable/Low Risk Equity portfolio is far more attractively valued than the wider market.” Countering inflationary pressures The rise of inflation is also likely to result in con- tinued equity market demand for the remainder of 2022. Eurozone inflation accelerated to a record high earlier this year and it is unlikely to subside in the near term, considering the spike in global energy prices. Trolle Hansen believes rising inflation must be a key consideration in the asset allocation process. “Higher inflation and interest rates have historically been detrimental for fixed income, particularly rates. However, the impact on equities, and the ability of companies to increase earnings and valuation, has been positive,” he points out. “If inflation continues to run hot and rates move upward at the expected pace – or even faster – we are comfortable in the composition of our Stable/ Low Risk Equity portfolio to continue delivering for investors over the medium term.”4 As NAM’s Multi Assets Team has repeatedly ex- pressed since the turn of the new decade, the 2020s are unlikely to resemble the benign investment envi- ronment of the prior ten-year period. With investors increasingly accepting the need to prepare for turbu- lence, the virtues of stability and balance are unlikely to remain underappreciated for much longer.
beta – to the equity market, which isolates exposure to the ‘defensive’ characteristics.
“Stable Equities have historically shown an outstand- ing ability to protect our portfolio when equity mar- kets have sold-off aggressively driven by economic or earnings’ recessions,” Trolle Hansen says. “Not only are the defensive qualities appealing, but these stocks have also proven to participate relatively well on the upside.” The expert adds: “Looking at the landscape today, we believe our Stable/Low Risk Equities continue to exhibit strong fundamental support, with the expected earnings growth of this basket of stocks far
3 There can be no warranty that an investment objective, targeted returns and results of an investment structure is achieved. The value of your investment can go up and down, and you could lose some or all of your invested money. 4 The performance represented is historical; past performance is not a reliable indicator of future results and investors may not recover the full amount invested. The value of your investment can go up and down, and you could lose some or all of your invested money.
ISSUE 01.2022
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