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How should you respond to current market volatility?

5 June 2019

Tags: Macro Economics

US, China and now Mexico; trade tariff talks have hit stock markets hard, sparking fears of a global recession. The headlines make for a perfect cocktail of doom and gloom, and naturally, investors feel uneasy.

Activity on the Selftrade platform shows a growing movement into cash – up 12.4% since the start of 2018.

Richard Pearson, Director at Selftrade from Equiniti shares his tips on how to ready your portfolio in these uncertain times:

“Global stock markets have come under fresh pressure in recent weeks as the global tariff war escalates. While it can be tempting to panic and act hastily, investors need to make sure they don’t rush to respond to market turbulence." 

Here are four useful tips to help keep calm and consider your options while 2019 remains in a state of instability:

1. Dividends are key

Don’t forget that dividend stocks tend to be less volatile than non-dividend stocks. They’re a way of receiving tangible returns on a regular basis, no matter how volatile the market is. This should provide some comfort during times of market stress and will soften the impact of any ensuing turbulence. It’s best to look at equity income funds to achieve this. The Artemis Income Fund is a good one to consider, it has a track record of performing well in the UK equity income sector and it tends to hold up well when the market is going in the other direction, a hallmark of many equity income funds. Troy Trojan Income Fund is another to look at. The fund concentrates on larger companies that generate enough cash to maintain and grow dividends for their shareholders.

2. Save, save, save

Being disciplined and saving regularly each month to build funds for investing is a good first step towards growing your portfolio. Setting up a direct debit and regularly investing should also shield you from a big slump in the markets.


3. Keep up momentum

It’s scary to invest your hard-earned money at a time of market volatility but staying invested will pay off in the long term. Diversifying and investing smartly lowers the level of risk and adopting a defensive strategy will mean you’re not trying to outperform the market - a near impossible task.


4. Strike while the iron is hot

If you’re feeling brave you may want to use this turbulence to your advantage. Certain shares that may have been too expensive in the past are now likely to be available at more attractive prices. Bold investors will be trying to grow their wealth rather than sitting on the side-lines.

Writer: Selftrade Tags: Macro Economics

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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.

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