Messages in Focus Navigate volatility

3 min read

Volatility is above long-term averages and is likely to remain so in the near term. We think investors can navigate this environment and reduce longer-term risks to wealth in several ways. Building up a Liquidity strategy can help reframe the losses in risk assets as temporary and therefore reduce the risk of forced selling, while structured investments or dynamic asset allocation strategies can help investors manage drawdown risks while staying invested.

Key investments takeaways:

  • Although our central scenario is for equity markets to end the year higher than they are today, volatility is likely to remain elevated in the months ahead.
  • To navigate this more volatile environment while reducing longer-term risks to wealth, we think investors should ensure they have a Liquidity strategy in place, funded with cash, bonds, and borrowing capacity to meet 3–5 years of spending that investors intend to pull from their portfolio.
  • We also see structured investments and dynamic asset allocation strategies as potentially effective ways of managing drawdown risks, while staying invested.

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