With the equity markets worldwide looking slightly over valued v's the fundamentals, and a plethora of negative scenarios looming which could potentially be triggered via a multitude of reasons such as Brexit, the trade wars, underperforming economies, and many other variables- should an investor look to hedge their exposure to a potential fall in the equities markets?
Whether you're looking to move into cash, gold, bonds, crypto or land- diversification at this stage is probably a prudent move.
Another way to diversify one's risk is to allocate capital to a more 'absolute' strategy. In other words- a strategy that can both buy and 'short sell' the markets, meaning regardless of the market climate- there are opportunities to yield a return.
One such strategy has been designed by The Portfolio Consultancy (TPC) in a 'trade copy' style which means it's very simple for investors of all investment levels and experience to replicate.
For those of you who are new to this type of investing- 'Trade copying' is becoming a more prominent option for investors as they become more sophisticated, and less trusting of the old guard of investment managers.
Many investors are questioning why would they pay large management fees, and in a period of underperformance be forced to pay large redemption fees, or face a redemption period if they request the return of their capital. Or worst still- be locked into the underperforming funds like the Woodford situation which made headlines throughout 2019 even though it was a favorite of many beforehand.
"Trade Copying' provides a very different, and some would say- a very refreshing alternative.
In simple terms, an investor is able to align their own portfolio with that of a successful trader or asset manager. The trader/manager will be trading their own portfolio and risking their own capital, and when the trader/manager takes a position in the markets on their own portfolio, the exact same trade is implemented on the investor portfolio per GBP under management automatically.
Probably one of the reason's why this sector in the investment world is gaining the current traction that it is, is because the fees are normally earned via a monthly subscription (which can be switched on or off at any time), or via performance.
Ultimately, the client retains control of their own account at all times, and the investment offers complete transparency.
At first, the market pioneers were companies like Etoro and they aimed their offering at a slightly more novice trader/influencer to build the accounts to follow, but now- the institutions are moving into the market place, and specialist strategy designers are beginning to host their own portfolios.
One of these specialists is The Portfolio Consultancy, who have launched a number of 'copy portfolios' for investors to follow hosted at various Asset Managers.
The Consultancy in question typically deal with asset managers, hedge funds, and other financial institutions, but they've now entered the world of 'trade copying' which means investors can have exposure to their strategies without the expense and lock in periods associated with vanilla asset manager portfolios.
The Multi Market portfolio launched in 2019 is gaining momentum and recognition in a challenging market climate. From reviewing the composition of their strategies it's clear they offer a very diversified portfolio with this proposition, and one which certainly ticks that 'absolute' box. The strategy provides exposure to worldwide equities, commodities, and the FX arena, and their information sheet suggests the Asset Manager who facilitate the strategy place hard stops on the portfolio to reduce the potential downside. The Asset Manager charges a profit fee AFTER the client has accrued 10%.
With the experts moving into the market place, and offering solid propositions like The Portfolio Consultancy's (TPC) flagship 'trade copy' strategy- trade copying might just become the investment of choice. Particularly in a market climate right now, where a hedge against equities seems like the right approach.
For further information on this strategy and it's live performance- please follow either of these links:
If you would like any further information on the Consultancy referenced and their other services please contact them directly or via our support team at EFN.
EFN (E Financial Newsletter) provide economic commentary through newsletters and online publications. We choose the most relevant news items to helps shape your investment decisions.
Press release distributed by Pressat on behalf of EF News, on Thursday 12 September, 2019. For more information subscribe and follow https://pressat.co.uk/