Cookie Policy

We use cookies on our website and have placed these on your computer. By continuing to use our website you consent to this. For more information, including how to change your cookie settings and to disable our non-essential Google Analytics cookies, please refer to our Cookie Policy. If you do not wish to be reminded of this on each visit, please use the close button.

Lower risk investing

July 2018


Tags: Investing Strategies

Investing your money always involves an element of risk but investors have a wide variety of both higher risk and lower risk investments to choose from.

At times of economic or market uncertainty ‘defensive’ stocks typically increase in popularity.

Defensives offer investors some protection against falling markets because they do not fall as far or as fast as other stocks. Ideally, they wouldn’t fall at all – or, at best, they increase in value as investors seek solace from market volatility and switch from speculative to defensive businesses.

Usually they have been found in sectors and industries such as utilities, consumer goods, pharmaceuticals and tobacco. What they have in common are relatively stable revenue streams, with demand for their products and services largely unaffected by the state of the wider economy.

For this reason, they are sometimes also known as ‘non-cyclical’ stocks and it is important to remember that while they are spared the full impact of a market correction they will generally not experience a significant upswing in demand when the economy recovers.

As well as defensive stocks, certain asset classes like bonds and gold are also seen as being safe places to ride out periods of market volatility.

Two different types of fund will make use of these safe haven investments to generate returns for investors with the aim of also protecting against loss.

Absolute return funds come in several different guises, but their aim is the same: to deliver a positive (‘absolute’) return in all market conditions. Some use a blended portfolio of bonds to achieve it, some will invest in the stock market, while others will use a range of different assets. Almost all will go ‘short’ on individual securities – i.e. they will use financial instruments to profit from the fall in the price of an asset – as well as investing in the normal way.

Examples of absolute return funds include:


JPM Global Macro Opportunities


Trade now 


Schroder UK Dynamic Absolute Return


Trade now


7IM Real Return


Trade now


Threadneedle UK Absolute Alpha


Trade now 

What is a multi-asset fund?

The term 'multi-asset fund' refers to a vehicle which invests across several asset classes and fund managers. The aim is to ensure that investors are not exposed to the market gains or losses of any individual asset class - say, for example, equities – thereby limiting risk and volatility.

A key advantage of a multi-asset fund is that it enables you to diversify at relatively low cost. Investors can put their money in just one fund and achieve a reasonable level of diversification without having to pay fees and charges on multiple funds.

Examples include:

Hawksmoor Vanbrugh

Trade now

 

Premier Asset Multi-Asset Distribution

Trade now 

You can start investing today through any of our account options:

Dealing Account

Access a wide range of global investments in this flexible, unrestricted account.

Find out more

Stocks and Shares ISA

Take advantage of tax free investing with our Stocks and Shares ISA today.

Find out more

Self-Invested Personal Pension (SIPP)

From great value to best-in-class, access the SIPP to suit your needs through our extensive network of providers.

Find out more

I've still got questions!

We’re on hand to help at our Customer Experience Centre on 0345 0700 720

Selftrade does not provide investment advice. This article is the authors view and is not the view or opinion of Selftrade and Selftrade accepts no liability for any loss caused as a result of the use of this information. The opinions expressed are those of the author at the time of writing and should not be interpreted as investment advice.

The value of investments can fall as well as rise and any income from them is not guaranteed and you may get back less than you invested. Past performance is not a guide to future performance. We do not provide advice or make recommendations about investments. If you have any doubts about the suitability of an investment, you should seek advice from a suitably qualified professional adviser.

In fact, even 61% of confident retired investors say they want more retirement income*.

Get ready for your retirement, with a SIPP from Selftrade.

Open a SIPP Find out more

*Source: LIBF & 7IM, 2018.