Investors could benefit from opportunities within volatile markets if they arranged their portfolios suitably, UBS Global Asset Management head of global investment solutions Curt Custard said yesterday.
Custard said if investors split their portfolio in two, then they would be well positioned to take advantage of investment opportunities in a volatile market.
He said he labelled the halves as ‘money-good assets’ that would not default and ‘nimble assets’.
“I like emerging markets, I like credit, I like US corporate credit. There are a lot of things that are ‘money-good’. That’s what you want if you invest for five years, you want your money back plus a return,” he said.
“You want to own assets that are ‘money-good’ that will earn you positive return.
“Then you need a bunch of money in nimble assets where you can ‘tap dance’ quickly because the market volatility is going to throw things out of line, and that is where the opportunity is. Any time there is volatility, that equals opportunity.”
He said by having nimble money that remained liquid, investors could take advantage of opportunities quickly and with more flexibility.
“There is real opportunity right now in that marketplace [US] because people are underestimating the macro risks, because we’ve recently seen a spate of good news,” he said.
But he did note there was a marked change in attitude because investors continued to shy away from risk.
There was a strong preference for people to have assets with a lower return provided it came with lower volatility rather than higher return and more risk, he added.
“I don’t think we’re going to go back to the go-go days of the ’90s probably in the rest of my investment lifetime,” he said.
