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.
AMP names incoming chief risk officer
Antares Equities hires new director
Former AFA CEO appointed to boutique board
Warning lights flashing on Aussie equities
What’s in store for the economy in 2018?
Busting common passive investing myths