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Key Strategies for Investing in Funds In 2018
Release Date:
2017-12-14
Description:
 
Investing without a strategy is to take unnecessary risks. Even when placing money in such diversified and liquid products as investment funds, it is necessary to have an investment strategy.

A good strategy should take into account the risk we can take, the money we are going to use, and the objectives we intend to achieve. But above all, the markets and products that we are going to use.

Which markets will perform best in 2018?

We can say that diversification is still necessary. Between fixed income and variable income, or between different variable income assets with different characteristics. Such diversification can only come from a portfolio of investment funds.

Investment strategies for 2018

Regarding strategy for investment fund portfolios, asset management experts Maritime Capital recommend paying attention to the following:
  1. Beware of emerging markets
Although in 2018 growth is expected from the emerging countries, with China in the lead, the fact is that if the Federal Reserve of the United States maintains its policy of raising interest rates, these economies may be resentful.

The reason is that these countries are characterised by covering their economic reform processes by borrowing in dollars. This is because many of them still have not stabilised their exchange system.

Even so, it may be attractive to include investment funds that maintain fixed or variable income in these emerging economies. This will be determined by the level of involvement expected in 2018 by organisations such as the International Monetary Fund or the World Bank for projects in emerging countries.
  1. Fixed income, yes but in combination
The great master of investments Benjamin Graham told us that we always have to maintain a fixed income percentage in our investments. This percentage can vary between 25 and 75% of the global portfolio.

Given the case of 2018, the most sensible thing would be in principle to observe which countries we will include in our fixed income portfolio.

In the case of Europe, the ECB is announcing its withdrawal from the bond purchase scheme, which will make the newly issued fixed income more valuable. This means that choosing the market timing, or time to enter the market, can be a good strategy for including a greater percentage of fixed income in our fund portfolio.

The key to fixed income in 2018 is selective purchase and careful analysis of the situation. So, we can reduce the exposure in fixed income and wait for the time to invest in it.

Having a fund of mixed variable income, with approximately 30% of fixed income, can be a good strategy until deciding to transfer to a higher percentage in fixed income, which will be determined by the movements of the Central Banks.
  1. Variable income. Pivoting between value and growth
There are two types of classic strategies when investing in equities. One of them is the strategy according to growth and the other according to value. The most important thing is to rotate the capital from one style to the other with ease according to the market trend.

Knowing how to move between the two styles is vital, depending on the period of time and the prevailing conditions, knowing that there is no type of star indicator that tells us when one style is better than another.

Growth funds seek stocks that increase their price, stocks that rise in price dynamically (quarter to quarter). It's a more aggressive investment style. This type of fund can be useful in 2018, as a new growth momentum is expected for European equities.

However, it is essential to not lose sight of our portfolio in value funds, and have a percentage higher or lower, depending on the market conditions. Unlike their cousins, the growth funds, the value funds have no concern for the rapid growth of the price.

Value funds try to go for companies with good financial statements that are being ignored by the market. They invest in them at a bargain price and it is expected that the market will realise that they are a diamond in the rough.

What is important, what investment funds really offer us, is the flexibility to mobilize capital in an agile way towards one strategy or another. Such investment funds provide us with a way to define the parameters of investment more objectively and accurately.
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