Dear Members and Friends

Welcome back to those of you who return to work this week and happy new year! Regular readers will know we often give this editorial space over to members to share their perspectives. We are delighted to have a piece this week on navigating the investment maze from member TIW Capital written by Mr. Mohit Ralhan, CEO. Read on for Mohit’s advice on building a resilient and sustainable investment strategy for this decade. All the best for a good week ahead.

Yours faithfully
Victor Mills
Chief Executive

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NAVIGATING THE INVESTMENT MAZE THIS DECADE

It’s no secret the global economy is going through a challenging phase. Major economies are facing the steep challenge of reigning in inflation through aggressive increases in interest rates and by reducing money supply. History teaches us whenever central banks, and especially the US Fed, take stringent measures the world economy will go through a period of recession. The risk is the recession may last longer this time given the convergence of multiple issues including labour shortages, persistent wage hikes, supply chain disruptions, the emergence of new strains of COVID-19 and military conflict.

The complexity of managing investments during times like the present increases multi-fold. Traditional asset classes, such as buy and hold equity, bond and real estate, are likely to be under stress and will need significantly active management. Now is an opportune time to consider income-generating investments that offer regular liquidity and higher principal protection. External leverage becomes riskier during such times too which means investors need to steer clear of investment strategies that use leverage to generate returns. The bottom line is investment risk has increased significantly and the composition of investment portfolios should reflect this, leading to reallocations of capital to insulate portfolios from the impact of a recessionary environment.

Of course, this is also a period which will separate skilful fund and investment managers from others. Times like these spur innovation in investment strategies designed to make portfolios more resilient eventually creating sustainable, long-term benefits for investors.