KUALA LUMPUR, Aug 18 (Bernama) -- Equity markets are facing heightened uncertainty stemming from rising inflation, slowing growth, the prospects of higher interest rates and geopolitical tensions, according to AllianceBernstein.
Amidst this unsettling shifting backdrop, investors may be wondering how to manage the resulting volatility within their portfolios or whether they should remain invested.
The global investment management and research firm, in a statement, said that exiting a rocky market instead of sticking it out may lead to worse results for nervous investors.
The firm’s approach to low-volatility investing targets companies with three fundamental characteristics: quality, stability and price, in order to help mitigate downside risks and generate greater returns for investors when markets recover.
AllianceBernstein finds that stocks of quality companies with stable performance patterns, and that are trading at attractive prices are a good way to navigate volatility.
“Rather than pull money out of the market, investors could take a low-volatility approach to build a resilient portfolio that can weather different market conditions, one that can reduce losses in market declines, while capturing most of the upside in a rising market to deliver a smoother pattern of returns,” said Southeast Asia client group managing director Karen Lim.
While most sectors have not been spared from the widespread market selloff this year, certain sectors have turned out less volatile than others. The broad technology sector, for example, was one of the worst-hit sectors, the statement said.
Some healthcare and consumer companies have also remained resilient, despite the market turbulence, it added.
Within each of these sectors, there will be winners and losers, but AllianceBernstein has found that companies with strong cash flows and business models are likely to withstand market pressures and thrive in subsequent recoveries.
-- BERNAMA
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