The combination of quantitative easing, increases in global interest rates and falling oil prices are likely to combine to give investors a bumpy ride in 2015, says Triple3 Partners.
Considerable volatility and asset movement is probable in the global market, according to Triple3 Partners chief investment officer Simon Ho.
“Investors should be prepared for new challenges as well as new opportunities,” said Mr Ho.
“After a period of laying dormant, foreign exchange markets will also experience volatility. The Euro is being battered and the decrease in the oil price means the currencies of those economies heavily reliant on oil production will suffer,” he said.
Moreover, as Chinese growth rates continue to slow, commodities such as coal and iron ore will face considerable fluctuation, Mr Ho said.
Triple3's Volatility Advantage Fund is distributed in Australia by Grant Samuel Funds Management.
Grant Samuel director and head of distribution, Damien McIntyre, said investing in volatility throughout 2015 will be a viable option.
“Volatility is usually negatively correlated to equity markets, so that when equity markets fall, volatility tends to rise, and vice versa," Mr McIntyre said.
"Investing in options on the VIX Index allows investors to access this negative correlation, which cannot be as reliably harnessed in other asset classes, making VIX well suited to targeting returns that are negatively correlated to the S&P500,” he said.
“VIX options now rank up with the world’s most liquid – and have been known to trade over one million options contracts per day,” said Mr Ho.
Mr Ho maintains that volatility is not simply a matter of risk, but provides investors with the opportunity to trade on a foremost market trend.
“Although most investors see volatility as simply a measure of risk, it is also an asset class in and of itself, and one that offers investors portfolio returns that are largely uncorrelated to equities,” he said.
Wealth management relationships are under threat as clients look to switch providers driven by the impact of the royal commission. ...
S&P Dow Jones has announced a new addition to its global ESG index using enhanced ESG scores and granular data. ...
Investor confidence is on the rebound and the ASX hit a 12-year high on Monday. But it’s not all good news for the Australian economy. ...