3 March 2022
Diversification the key in volatile times
The evolving events in Ukraine are clearly disturbing from the point of view of human suffering as well as Eastern Europe state sovereignty and stability. Our thoughts are foremost with those in Ukraine at this uncertain and dangerous time.
In such uncertain times significant market moves like those seen as the crisis is evolving are to be expected. Rest’s experienced managers have seen these gyrations before; they will no doubt see them again. Throughout turbulent times a continued focus on delivering a positive outcome longer-term is key, as is maintaining a diversified investment approach to help with this goal. All investments do not always move in the same direction at the same time, so diversification helps downturns in some underlying positions to be offset by positive returns in others. In our Core Strategy investment option we hold thousands of underlying securities across multiple asset classes for exactly this reason – over time we aim to ensure those that increase in value outweigh those that don’t.
Rest went into this period of uncertainty carefully managing a balance within our investments to ensure that the portfolio is well positioned to withstand short term market volatility. While events like recent days are undeniably tragic for those involved, they often offer opportunities for investors to reposition portfolios in holdings that they believe will deliver longer-term value, at a better price. Remaining nimble and responsive is key in these times.
Rest’s Core Strategy investment option is a complex but strongly diversified portfolio that maintains resilience through several sources and many carefully considered positions. The future weeks will be an interesting time in multi-asset investing. We expect continued volatility in unit prices and markets as the challenges of inflation, military conflict, and expensive assets (relative to history), play out. Rest remains confident that we have the right team in place to maintain focus on delivering long-term superior investment performance for our members. Nobody knows exactly how this will play out, but we will maintain our investment beliefs, and rely on our decades of experience.
Rest’s position on Russian assets
As at close of business on 24 February, Rest’s Core Strategy’s exposure to Russian holdings was less than 0.1% of total assets. Rest’s Sustainable Growth investment option does not currently have any exposure to Russian holdings.
We are actively engaged with our investment managers in assessing the political situation and the evolving sanctions. Rest intends to divest any direct portfolio holdings of Russian securities in accordance with our members’ best financial interests and regulatory sanctions. Our equity and bond investment managers are already not permitted to initiate any new, or add to any existing, Russian positions.
What should I do if I’m concerned about my investments?
At times of uncertainty and market volatility it’s important not to panic or try to time the market. It can feel tempting to switch investments to a ‘safe’ option such as Cash, but this can result in a poor financial outcome in the long run.
Rather, a better approach might be to take a calm look at your current investment option and determine whether it’s right for your current circumstances. How? Use our Investment Choice Solution below:
Check your investment choice is right for you
It is important for Rest members to be in the investment option with the right level of risk for their circumstances. In just 7 minutes, our Investment Choice Solution will ask you some simple questions to help you learn more about your investment risk profile and give you advice on which Rest investment options are right for you.
This information is current as at 3 March 2022.