‘Fear’ should not drive investment strategies

‘Fear’ should not drive investment strategies

In a period of volatility, investors need to resist allowing fear to dictate their investment strategy, says Ariel Investments.


Ariel Investments chief investment officer Rupal Bhansali said “just as greed should not drive a portfolio, neither should fear”.

Ms Bhansali said investors’ aversion to volatility stems from the global financial crisis, but such an aversion cannot dictate portfolio allocations. 

“We believe volatility can be the friend of the long-term investor, just as it is often the enemy of the short-term investor.

"Indeed, we think one of the best times to find value is during periods of volatility,” she said.

According to Ms Bhansali, by adopting a contrarian approach, investors are forced to embrace volatility. Regarding specific stock selection, she points out that the technology and telecom sectors are favourable.

“While we are not positive on heady growth stocks in the technology sector such as social media, we are bullish on steady growth companies such as Microsoft.

“Investors are underestimating how well the company is positioned for a mobile and cloud world,” she said.

In terms of telecom, Ms Bhansali signals out US wireless provider Verizon Communications. Despite market concern over rising interest rates hurting the sector, she said the company provides investors with income and growth potential.

Read more:

Perpetual posts $64.4m half-year profit

Hunter Hall LIC profit down 88%

Monash Investors launches LIC

Foreign investors remain elusive: report

Plato IM appoints senior portfolio manager

 

‘Fear’ should not drive investment strategies
investordaily image
ID logo
promoted stories

Appointments

investordaily image

AMP names incoming chief risk officer

Jessica Yun

investordaily image

Antares Equities hires new director

Staff Reporter

Brad Fox

Former AFA CEO appointed to boutique board

Staff Reporter

Analysis

investordaily image

Warning lights flashing on Aussie equities

Roy Maslen

investordaily image

What’s in store for the economy in 2018?

Frank Uhlenbruch

ST Wong

Busting common passive investing myths

ST Wong