Rebalance your investment portfolio to survive the crisis
Generally, when people start investing the first thing that comes into their minds is “Expected return”. But not many people will consider the chance of losing their initial investment capitals which is basically called “Investment Risks”.
According to MSCI All Country World Index, a global equity index that measures the equity performance in both the developed and emerging markets, the performance of the world’s equity market has been in the uptrend since 2005. However, when examine closely, the index shows a devastating effect during each global crisis.
The subprime crisis in 2008 or many people familiar with Hamburger crisis, is the crisis that originally occurred in the United states. A period where the US stock market lost more than 50% of its value. The subprime crisis was leading the world economy to the great recession during 2007-2009.
In 2016, crude oil prices plunged from $100 per barrel to under $30 per barrel. The collapsing of oil price is directly affecting the energy sector. Those companies engaged in oil business experienced enormous lost in their inventories. They had to cut down their investments, lay off their labors.
Until the beginning of the year 2020, when our planet faced the new challenge called “COVID-19”. The coronavirus first originated in Wuhan, the capital of China’s Hubei province, in late 2019. It has currently killed over 1,000,000 people globally. Unlike any others global economic crisis, the Covid-19 outbreak has created both supply and demand shocks. Slowdown of public and private consumptions from cities lock down and travel restrictions cause businesses around the globe to suffer or even shut down from the impacts. Stock markets all over the world sharply dropped on the average of over 20%, some individual stock has plunged more than 70%-80%. (Source: MSCI All Country World Index from February 4th – March 30th, 2020). As of today, there remains no specific cure or vaccine against the coronavirus, which means the number of infected cases and deaths continues increasing and no one know exactly when this war between humankind and the virus is going to end.
Therefore, investors must be aware that market uncertainty is likely to occur anytime in the future. The concept of “portfolio rebalancing” is always good to keep in mind. Investors must always be closely monitoring the latest financial news and economic data for a possible portfolio rebalancing. There are indicators that could potentially signal a market downtrend prior to the actual crash.
Portfolio balancing is the process of adjusting portion of assets invested in the portfolio to new asset allocation plan when investment strategy changes. When the stock market is volatile, investors might decrease the portions investing in stocks and increase the portion in fixed income or bond which is less volatility. Additionally, gold can be seen is a safe haven when the stock market is extremely volatile.
In common, new investors or traders are unable to see the clear signal of the market directions. Therefore, investors are recommended to invest in a very well diversified funds such as “mixed fund”. Mixed funds normally invest in both debt and equity to generate well diversified risk and return. Investment portions in each asset will be adjusted which depends on fund’s investment policy.
Principal Balanced Income (PRINCIPAL iBALANCED) is a mixed fund that has a policy to invest globally in equity instruments, debt instruments, convertible bond, gold and units of CIS including Exchange Traded Fund (ETF). The investment portions are according to the decision of the fund manager.
The fund manager may execute transactions to capture the best return and rebalance the portion of assets and securities holding. Therefore, investors can be assured that their investment will be taken care of by professional fund manager.
Additionally, Principal Balanced Income (PRINCIPAL iBALANCED) has offered many asset classes to meet investor’s needs. For investors who prefer to gain stable return regularly we recommended PRINCIPAL iBALANCED Class-D which offers a dividend payment every 3 months and Class-R which offers an auto-redemption payment.
For more information please contact Principal Asset Management Co., Ltd
Phone: +(662) 686 9595
• The investors should study and understand the product (fund) feature, return condition and risk factors carefully before making an investment.
• The persons interested in investment should study the prospectus carefully and understand “Investment Policy”, “categories of Investment Securities”, “Assets Allocation”, “Important risk factors” and “Warnings/Advices” before investing and keep such information for future reference. For those who wish to know additional details, can request a prospectus for project information from the Asset Management Company or its appointed Selling Agents.
• The Fund’s operating performance in the past does not guarantee the Fund’s operating performance in the future.
• For Principal Balanced Income (PRINCIPAL iBALANCED), investors should study redemption policy and dividend payment conditions in the prospectus or visit www.principal.th