ADVERTORIAL FEATURE
Diversification : The solution against market volatility
To say the last few years have been volatile for investors would be an understatement . Global equity markets plunged as the world economy was brought to its knees by the Covid-19 pandemic . Alongside the share price declines , dividend payments also plunged in 2020 , the worst year for payouts since 2011 . 2021 was a welcome respite as economies reopened following the rollout of highly effective vaccines – though some regions continue to deal with recuring Covid-19 outbreaks today . Unfortunately , that respite has been short-lived as 2022 has brought with it a different set of challenges . Stock markets have experienced their worst first half in 50 years and investor sentiment continues to be dampened by geopolitical tensions , elevated inflation and rising interest rates amid a cost-of-living crisis . And that pain doesn ’ t look like it will abate anytime soon , with a recession now the base case for the global economy . As such , investors have been scrambling to find ways to insulate their portfolios from market volatility .
Home comforts Though the impact has been felt across global equity markets , some regions , sectors and businesses have been more resilient than others . The UK , in particular , has been resilient – though over the last few weeks it has come under pressure over monetary and fiscal policy concerns . When markets come under pressure , it ’ s natural to be concerned , and investors have reacted in different ways . Some have chosen to invest in the best performing asset whilst some have chosen to invest in what they know – also known as “ home country bias ”. While these strategies might work for some in the short term , for long-term investors , history has time-and-time again shown them why focusing on
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