Asset allocation

The big fear keeping investors awake

Fears of recession are rising steadily in the investment community. Fortunately, central bankers are not sitting on their hands waiting for recession to happen: since the beginning of the year they have collectively transformed the outlook for interest rates. Equity markets have responded with double-digit gains since the low point just before Christmas last year.

Where are our five experts bargain-hunting in the first quarter of 2019?

A year ago in this column, Keith Wade, chief economist at Schroders, issued a stark warning to investors. He said: “Very few people think the markets will be as good in 2018 as they were 2017.” That proved quite an understatement. The FTSE All World index, which covers shares in 50 markets, ended 2017 up 22% – its biggest rise since the financial crash. However, a year later it had lost almost all of those gains, mostly in the final febrile months of 2018.

The dangers of too much portfolio diversification

Diversification is often described as ‘the only free lunch in town’. The theory goes that by diversifying your investments across a range of asset classes, geographies or investment styles, you can potentially reduce risk and volatility within your portfolio. Effectively, you are not putting all your eggs in one basket.