Losing Control Over Asset Prices Going Up and Down?

Monday, 28 March 2022
Written by Ethan Lau, Chief Content Management Officer of GAX MD

Here’s how MYTHEO's Inflation Hedge Portfolio can safeguard your asset values.

MYTHEO combines 3 types of portfolios to deliver all-weather returns

Out of investment options in face of market volatility?

Uncertainty clouds the world’s economy as Russia's invasion of Ukraine shows no signs of slowing down. Global oil prices look set to stay above USD100/barrel for a while longer as the EU considers joining the US to ban Russian oil imports - creating the classic case of energy supply shortage. When facing a volatile market, a long-term investor knows the wisdom of controlling short-term risks but yet stays invested to avoid missing out on the eventual recovery.

“When facing a volatile market, a long-term investor knows the wisdom of controlling short-term risks but yet stays invested to avoid missing out on the eventual recovery.”

Amid all the market clutter, one asset class seems to be showing its resilience – the real assets. Here, we are referring to precious metals (such as gold and silver), infrastructure, energy and related sectors, real estate as well as commodities.

Why diversified portfolio remains key to investment success?

As the Russia-Ukraine crisis escalates, investors are asking if it makes sense to redirect funds from stock markets into gold and silver, often regarded as safe assets, to diversify their investments.

But have real assets lived up to investors’ expectations?

For MYTHEO’s inflation hedge portfolio (designed to grow above the inflation rate), it has seen firm returns from precious metals and energy-related ETFs. One example is the Energy Select Sector SPDR Fund, which includes energy-related stocks, which rose +19% (USD-base) in January 2022, followed by +7% (USD-base) in February 2022. By comparison, real estate-related ETFs remained weak due to the rising interest-rate environment.

Yet, a long-term investor understands the resilience of a diversified portfolio for investment success. One example will be MYTHEO’s inflation hedge portfolio where holdings in precious metals, energy and even real estate ETFs have seen no extreme price fluctuations despite Russia's invasion and growing market uncertainty in February 2022.

‍But inflation hedge is only one of three portfolios by MYTHEO, which together combines to create an all-weather investment strategy.

MYTHEO’s three pillars to a sustainable investing

MYTHEO has a combination of three types of portfolios for different purposes called the "functional portfolios".

Growth Portfolio

Objective: Aim for high returns over the long-term

Diversified investments centred on stock ETFs in various countries and regions, aiming to earn profits in line with global economic growth.

Income portfolio

Objective: Reduce risk and secure stable and steady returns

Invest in various fixed-income ETFs globally to secure stable and steady returns without incurring significant losses.

Inflation Hedge Portfolio

Objective: Protecting asset values from price fluctuations

Diversified investment in ETFs centred on real assets, designed to exceed the rate of inflation while also reducing correlation with other portfolios.

The allocation ratio of these three types of portfolios is provided by MYTHEO based on the needs of each investor.

What have we learned from asset prices going up and down in today’s volatile market? The importance of a well-diversified portfolio for investment resilience.

Factors that cause asset prices to fluctuate are diverse, fluid, and more importantly – very difficult to predict.

But as February's performance shows, MYTHEO’s diversified investments have helped investors to curb extreme fluctuations in asset value, and be more efficient in generating returns over the long term.

MYTHEO’s inflation hedge portfolio with diversified investments in various real assets have proven to be resilient in the face of market volatility. When combined with MYTHEO’s growth portfolio and income portfolio, investors are well-positioned to capture a rebound in stock markets, while being on the defensive with holdings in government and investment-grade corporate bonds.

At MYTHEO, we remain steadfast in our belief in this diversified approach as it has proven to be the most effective and sustainable way of investing.

We are confident and believe that the most effective investment method is to invest on a long-term perspective combining growth, income and inflation hedge functional portfolios that make up our recommended portfolio. A digital investment platform like MYTHEO is here for you to achieve your long-term financial targets by having a diversified investments in an easy and affordable way.

This material is subjected to MYTHEO's Notice and Disclaimer.

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