Where To Invest, Part 1

Where To Invest, Part 1

almost 4 years ago2 mins

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Investors are still taking stock of a wild start to 2020. But with some big winners emerging from the carnage, thoughts are naturally turning to where long-term opportunities may lie in the second quarter of the year 🕵️‍♂️

What does this mean?

Investment firm Morningstar’s first-quarter research report made for grim, if unsurprising, reading on Thursday. Consumer staple, tech, and healthcare stocks did better than oil and financial services. Chinese, Japanese, and American share indexes lost less than Europe and the UK. Emerging market bond funds lost an average of 14%, while US dollars and government bonds helped some investors eke out a profit.

One hedge fund, however, raised eyebrows late Wednesday as it announced a 4,144% return for the first three months of 2020. The “black swan” fund, managed by Universa Investments, uses unconventional option trading – rather than traditional safe havens – to offer big-money investors protection against stocks falling.

Just 3.3% in the fund and 96.7% in US stocks has worked well in recent years – and months
Just 3.3% in the fund and 96.7% in US stocks has worked well in recent years – and months

Financial giant Bloomberg, meanwhile – which regularly taps professional investment managers for tips – is assembling ideas for those looking to tweak their own long-term approach given the current economic environment. And those include a few more accessible strategies… 🧐

Such as?

One big BlackRock manager recommends replicating what worked last quarter. As well as US dollars and bonds, upping allocations to safe German government debt and trusty gold – perhaps via an exchange-traded fund (ETF) like the low-cost SPDR Gold Minishares Trust – should work well in a low or shrinking growth environment.

It’s an approach that’s unlikely to deliver 4,000% gains; but then again, Absolute Strategy Research is warning against attempts to “buy the dip” in stock indexes, cautioning – like Universa – that further drops could lie ahead 😟

Diversification, as always, remains a good bet for most investors. Still, check out our Pack on Futures & Options if you fancy yourself a Universa-style hedge knight. And check back tomorrow for more protips on the second quarter…

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