You are here: Home - Investing -

What is the best way to add risk back to portfolios?

Written by:
Johanna Kyrklund, head of multi-asset investments at Schroders, gives us few tips on adding risk back to our portfolios.
What is the best way to add risk back to portfolios?

She says:

“With events in Europe casting a shadow over the global economic outlook, investors should be looking for assets which have a valuation cushion, and which are liquid. My view is that risk is best added through developed market equities.

“In terms of other assets, corporate bonds offer relatively good value in the yield spread over lower-risk, but expensive, government bonds – but absolute levels of yield are not so attractive. Everyone remembers the amazing buying opportunity at the end of 2008 – and consequently many investors are in love with credit….but valuations simply aren’t as compelling as they were back then.

“In terms of emerging market debt: again, yields are not as attractive as the buying opportunities we’ve seen in the past, and if market conditions deteriorate they can become illiquid. Furthermore, emerging market currencies are vulnerable to a growth slowdown in China.

“However, there are good value opportunities in the equities of several high quality companies in developed markets. The problem is their volatility, as everyone holds their breath to see whether disaster in Europe will be averted. So my recommendation would be to water down a portfolio of developed equities with cash as required, rather than investing in lower volatility, expensive assets.”

Related Posts

Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Top Tips on planning your pension

Our handy tips for financing your retirement could make all the difference in your later years.