At the extreme point when the cycle is at its most extended and the economies are overheating (as evidenced at some points as an example by consumer led and wage inflation) and central banks intervene to reduce the money supply, then you should be very defensive and focus on the asset that will provide the desired outcome, with the least amount of expected volatility.
By doing this you lock in the returns achieved, potentially miss out the losses associated with a recessionary and slowdown phase and reallocate to risky assets as you move through the recovery and expansion phase of the economic cycle. Therefore, at that extreme we believe that all clients should be in cash or in assets that are at that point not correlated to equity market volatility. This is not market timing as that is something traders try to do, this is in our opinion, cyclically adjusting the portfolio to deliver the “client’s outcome” and institutionalises the behaviour to sell high and buy low.
To understand more about our strategy and the performance / volatility of the underlying portfolios over different time periods please click here…..
Please note the value of investments may fluctuate in price or value and you might get back less than the amount originally invested. Past performance is no guarantee of future performance.