Swiss Life Asset Managers expects increasing volatility. It is still unclear what role the new COVID-19 virus will play. Investors should consider put options.
After the equity markets had an excellent start to the new year, a new coronavirus is emerging on the world stage. Although its impact is difficult to predict at present, the example shows how quickly trends can subside. Swiss Life Asset Managers nevertheless advises investors not to sell equities should potential risks arise. They would then benefit less from a renewed upswing and be forced to invest their liquid assets elsewhere.
Swiss Life Asset Managers considers it unwise to review equity exposure on a daily basis. In its view, equities in portfolios play an important role as there are few alternatives in a low bond yield environment.
Over the coming quarters, Swiss Life Asset Managers expects developed countries not to exploit their potential economic growth to the full. Investors should be prepared for higher volatility and hedge at least part of the portfolios with put options.