The best form of defence? How about attack? Not in the sense of recklessly piling more money into equities, but rather getting your teeth into new investments in genuine alternative strategies.
And now could be the perfect time to strike.
“Now is the time to get on the front foot and find areas that maybe have gone unnoticed,” says Andrew Herberts, head of private client investment management at Thomas Miller.
“We are thinking much more about downside resilience and protection, rather than trying to participate in another 20% rally, which we don’t think is going to happen.”
While the consensus is of more market volatility in the 12 months ahead – as has been the same message at the beginning of every year since the financial crisis – Herberts warns not to expect any support from valuations.
“You can’t make trades based on valuation and expect them to work in three months; they happen over years.
“When things get stretched, it takes a while for the market to realise it and shake out that euphoria. We are looking more for downside resilience.”
Herberts talks of the alternatives space becoming “vitally important” in the next investment cycle, on the basis that excessive quantitative easing has meant assets that should be negatively correlated with each other have moved closer together.
