Why you need to be diversified?
Alex Crooke, Portfolio Manager of The Bankers Investment Trust, talks about the impact of rising input costs (wages and raw materials) on companies, areas where he is finding opportunities and the benefits of global diversification in a volatile market environment.
Key Takeaways:
- Global equity markets have struggled this year, with sentiment largely dominated by concerns over rising inflation and the prospect of faster-than-expected central bank tightening. The war in Ukraine, higher energy prices, and persisting supply chain disruptions have also served as a headwind.
- We are investing cautiously in China and are focusing more on defensive areas such as health care. However, the governments zero-Covid policy remains a risk to the country’s economic growth.
- Companies are using nearshoring to reduce costs and supply chain disruptions. By having certain elements of their manufacturing closer to home, they can reduce transportation costs and have more control over their processes.
- With economies, sectors and businesses are all on different cycles – having a globally diversified portfolio has helped us provide investors with a smoother, less volatile ride as the risk is spread across different regions/sectors.
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These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.
Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
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- Where the Company invests in assets that are denominated in currencies other than the base currency, the currency exchange rate movements may cause the value of investments to fall as well as rise.
- This Company is suitable to be used as one component of several within a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested in this Company.
- Active management techniques that have worked well in normal market conditions could prove ineffective or negative for performance at other times.
- The Company could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the Company.
- Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
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