The chief investment officer at One Four Nine Portfolio Management has told financial advisers to do nothing despite the continuing war between Russia and Ukraine.
Russia launched a wide-scale attack on Ukraine on 24 February 2022, and despite political measures like financial sanctions, the war has failed to de-escalate.
Unfortunately, this gives investors the urge to alter their portfolios rather than stick with their long-term investment game plan.
Bevan Blair, chief investment officer at One Four Nine Portfolio Management, told International Adviser: “Advisers should be telling their clients stick with their current plans. They have been set up for the long term to meet their clients’ needs and to alter these in the face of the unpredictable is not serving their clients in their best interests.
“When volatility is high and the market is febrile, it is only luck and not skill that will determine the short-term performance if you are minded to try and time the market. Stay invested and look through to the long term, especially if you believe in a long-term.
“The message I have given to our financial advisers is to do nothing and ride out the short-term noise. At the moment, the uncertainty of the conflict, where it takes us and what the consequences are too high to play with clients hard earned wealth.
“Stay the course with the current plan and when we get more clarity or markets calm down assess how the objectives of that plan have changed, if at all.”
Multi-asset portfolios
Unfortunately, the investment world has not had just the impact of war to deal with, as rising inflation is also continuing to rear its ugly head.
In the UK, inflation rose by 6.2% in the 12 months to February 2022.
So, are multi-asset portfolios structured well enough to tackle the issues around the conflict and rising inflation?
Bevan added: “Multi-asset funds are structured as well as they can be for unknown quantities like conflicts around the world. A war in Europe is frankly something no money manager would have been prepared for and an escalation in the conflict would place all markets under incredible stress, especially from a diversification stand point.
“Some markets may be favoured in the short term, including gold, commodities, sovereign debt. But they have to function normally to be of value.
“If things deteriorated there is no guarantee that these markets would function normally. You just have to look at what is happening on the London Metal Exchange with nickel to see that.”
