Disclosure – Non-substantive Research
This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. With this commentary, Kepler Partners LLP does not intend to influence your investment firm's behaviour.
This year has been full of surprises, and not many of them good ones. Inflation figures surpassing expectations and the Russian invasion of Ukraine have been key drivers of tumultuous markets. Prior to 2022 investors were well rewarded for simply following trends, and the volatility this year is perhaps a painful reminder of the necessity for good portfolio diversification. Diversification of asset classes is important, but so is diversification within asset classes. Simply buying growth or buying value is unlikely to work as it has in recent years and, in a volatile environment, finding equity investments which offset each other’s risks is potentially rewarding. To that end, we have analysed the correlations of equity investment trusts versus key major indices over the past three years. In this article we highlight a number of strategies with perhaps surprising diversification potential.
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