Hong Kong, Hong Kong S.A.R., August 23, 2015 --(PR.com
)-- With receding global risks, the need for strategic investment to maximise profits, is on the rise. Meridian Capital Management, a Hong Kong based wealth management firm, has recently introduced an Investor’s Guide to help financial advisors, market analysts and clients focus on returning back to earnings and other fundamentals.
Mr. Steven Woodall, who heads the Portfolio Construction and Risk at the firm, writes, “This is the time to return to normalcy by accepting the probability of lower returns but also keeping in mind that the right risks can assure a reward balance by choosing the right investments.”
The Guide highlights a few essential strategies that should be adopted in order to survive market swings:
Keeping U.S. Stocks as Core Holding- They remain the best shot at staying ahead of inflation, especially when a bond portfolio is not expected to do very well. The relative advantage of stocks will always be higher, especially because the U.S. economy continues to be the healthiest player on the field. Market cycles keep changing and there will always be opportunities to buy stocks when they are inexpensive.
Money widely spread is better than restricting it- A typical investor should hold 20-30% of his stock allocation in foreign equities which includes his 5% in emerging markets.
Using bond holdings as safety measures and not means of income- Riskier investments do pay off and this strategy is an alternative means to warrant higher profits. If one does not want to take risks outside the stock portfolio, then it should be accepted that the ultimate role of the bond funds is to provide safety and not to enable spending of money. Mr. Woodall emphasizes on this strategy by writing that, “Volatility can be expected to return to the stock market after a period of relatively calm conditions. In such a scenario higher quality bonds offer the best hedge against stock losses”.
This means sticking with mutual funds and ETFs that hold investment grade ranking or are alternatively the highest rated junk bonds. Solely relying on government issued bonds will not help. Holding corporate bonds will ensure better yields while the market swings further.
Adding to this information, the Guide also states that short term bonds are more susceptible to losses in the face of the Federal Reserve pushing up interest rates. The Fed is not in a comfortable position to set long term rates which has driven up the demand for long term treasury bonds. This further ensures a downward pressure on the rates that these bonds pay. This has led to a finding by the firm that intermediate-term bond funds that have a reported yield of 2.25% in today’s market conditions, is definitely a reasonable option.
In his conclusive statement as written in the Investor’s Guide, Mr. Woodall has this to say, “It is not always about winning but also about not losing out to the upswings of the global market.”
Meridian Capital Management is a Hong Kong based investment brokerage firm that helps investors to achieve their investment goals through strategic trading, competitive returns and tailored solutions.