InvestSMART's Performance for the month of February
International Equities Portfolio
Property and Infrastructure Portfolio
The market and investors swing from times of euphoria and despair, driven by macro economic, geo-policitcal and central bank gyrations and amplified by the news and social media cycle. Right now, the headlines would suggest it is a time for investors to play defence.
The most recent attention grabbing headline is from a bank up until last week most of us had never heard of and probably would never have had it not been for it's mismanagement of its bond portfolio as Phil Bish eloquently explains here. But let's take a step back and consider our exposure to the collapse of SVB.
The InvestSMART Diversified Portfolios have zero direct exposure to SVB and it's venture capital/tech clients. The international shares exposure is via the Vanguard MSCI Index International Shares ETF (VGS). This ETF holds over 1,400 companies around the world. Apple is the largest holding at approximately 4%, Microsoft second at 3%.
In total there are only six companies in the ETF in excess of 1% of the portfolio, the remaining 1,394-ish are well below 1% of the portfolio giving investing incredible diversification. Additionally, these are the largest, most profitable businesses in the world, far from tech start-ups.
When it comes to investing it is as important to play defence as it is offence. Part of our defence against situations like SVB is broad diversification in well established businesses and markets. The other part of defence is for investors to hold for the long-term and look through these attention capturing headlines.
Additionally, for those with long investment time horizons and some spare cash it pays to go on the offensive adding to your investments while everyone else is on the back foot.
Frequently Asked Questions about this Article…
The InvestSMART Diversified Portfolios have zero direct exposure to SVB and its venture capital or tech clients. This means investors in these portfolios are not directly affected by the recent issues surrounding SVB.
The Vanguard MSCI Index International Shares ETF (VGS) offers diversification by holding over 1,400 companies worldwide. This includes major companies like Apple and Microsoft, which are the largest holdings, ensuring a broad spread across various industries and regions.
Diversification is crucial because it helps mitigate risks by spreading investments across various assets and sectors. This strategy protects investors from significant losses if one particular investment performs poorly, as seen with the SVB situation.
Holding investments for the long-term allows investors to look beyond short-term market fluctuations and news headlines. This approach can lead to more stable returns and helps in weathering market volatility.
Investors can play defense by diversifying their portfolios with well-established businesses and markets, and by maintaining a long-term investment horizon. This helps protect against unexpected market events and reduces the impact of negative news.
For those with a long investment time horizon and some spare cash, it can be beneficial to invest more when others are hesitant. This strategy allows investors to potentially buy assets at lower prices and benefit from future market recoveries.
Macroeconomic and geopolitical factors can significantly influence market conditions, causing swings between euphoria and despair. Investors should be aware of these influences but focus on long-term strategies to navigate through such cycles.
The news and social media cycle can amplify market movements and investor emotions, often leading to hasty decisions. It's important for investors to stay informed but not let headlines dictate their investment strategies.
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