BUILD RESILIENCE.

Now is the time to build investment resilience

We are in uncharted waters. The coronavirus crisis has sent shockwaves felt in both our professional and personal lives. Uncertainty has gripped global markets and left many questioning, where do we go from here?

In times like this, it is crucial for investors to look beyond market gyrations and rethink their portfolios. As we prepare for a longer recovery period, it is important to keep a level head and take a long-term view while looking out for opportunities.

Now is the time to build a resilient portfolio.


Step 1: Stay invested

Markets can be volatile in the short-term, but patient investors tend to be rewarded over longer periods of time. As disruptive as the current situation is for markets, it is also generating opportunities, such as the acceleration in scientific research, telemedicine, and our digital lifestyle. Watch the video to learn more.

Staying invested and riding out volatility can unlock the potential of long-term gains. Through thirty years and multiple crises such as the Tech Bubble of 2000, Sub-Prime Mortgages in 2008, and European Debt in 2010, global equity markets (as represented by MSCI ACWI) has a cumulative return of over 730% .

Stocks have also been proven to spend more time in the black than the red. From 1999 to 2020, there was a higher percentage of time that we saw gains than losses. That percentage also increases over a longer time duration.

Step 2: Don’t time the market

The tendency for investors to jump in and out of the market can cause them to miss the potential in market recovery and this could be costly. Watch the video to learn more

Firstly, the cost of buying and selling by trying to time the market will quickly add up. Secondly, the returns of an investor who stayed fully invested over the longer term will likely beat that of an investor who missed the best trading days.
Finally, opportunities for market gains may come in the potential market recovery, and this could become a missed opportunity if investors had jumped out of the market to limit short-term losses.


Step 3: Build a resilient portfolio

Healthcare, economic, political, and social tensions continue to unsettle everyone. Inaction at this point may be the most vulnerable position to take. Two complementary approaches you can adopt for a resilient portfolio include:

Protect Your Investments
in times of volatility


Adapt & Seize Opportunities
as they arise in changing market conditions


Protect Your Investments

Build a defensive portfolio

Though market volatility can cause anxiety, you still have options to help protect your portfolio. Defensive approaches can help reduce the impact of down markets while looking to capture some of the growth potential offered by investing.

Three components for a defensive portfolio

Defend

  • Find refuge against broad-based market risks in safe-haven currencies that have traditionally behaved well in periods of heightened volatility.

  • Maintain portfolio liquidity by elevating cash levels and holding short-term US Treasuries to quickly pursue opportunities as they arise.

Diversify*

  • Reallocate capital and invest in a wider variety of assets to reduce a portfolio’s exposure to risk.

  • Look for truly diversified investments, such as hedge strategies, to protect the portfolio during volatile times.

  • Focus on building a portfolio of uncorrelated risk assets.

Buffer

  • Regular income from investments can act as a buffer for investors when markets fall.

  • Look for income opportunities in select emerging markets, where yields are higher and capital growth is stronger.

Protect Your Investments
with Franklin Templeton

Templeton Global Bond Fund

Templeton Global Total Return Fund

Franklin Strategic Income Fund

Franklin K2 Alternative Strategies Fund

Franklin Flexible Alpha Bond Fund

Franklin U.S. Government Fund

Complement a defensive investment strategy by capitalising on opportunities that arise in uncertain market conditions.

Adapt and seize opportunities

ADAPT & SEIZE opportunities

Be opportunistic and adaptive

There is opportunity in market volatility. This is the reason to remain invested. Adapt your investment strategy and be ready to seize opportunities in the market when they arise.

Two themes that will drive future performance

Technology

  • Technology dominates much of both the global economy and our daily lives.

  • Adoption of digital transformation tools has been accelerated by the coronavirus crisis.

  • The next big opportunities in technology will be in digital transformation and its associated sub-themes, such as artificial intelligence, cloud computing, and E-commerce.

  • Healthcare demand and biotechnology innovation will be the beneficiaries of an ageing global population.

  • Opportunities can be found in both the developed and emerging markets, in leading US and Asia technology and biotechnology firms.


Emerging Markets

  • Technology, demographics and intra-regional cooperation have transformed emerging markets into a global powerhouse.

  • Historically, crises have typically driven greater innovation, resulting in some accelerated digitalisation, e-learning and healthcare trends, all of which are expected to become powerful sources of growth.

  • Longer term themes that have driven growth for decades will persist in emerging markets, such as urbanisation and consumption upgrades that benefit small capitalisation companies

  • While China’s economic data will likely remain weak for some time, we believe the long-term growth outlook remain strong due to strong governance through resolute policymaking which has led to relative resilience.

Adapt and Seize Opportunities
with Franklin Templeton

Franklin Biotechnology Discovery Fund

Templeton Asian Smaller Companies Fund

Franklin Technology Fund

Templeton Emerging Markets Dynamic Income Fund

Franklin U.S. Opportunities Fund

Templeton Asian Growth Fund

Franklin Mutual U.S. Value Fund

Complement an opportunistic investment strategy by protecting your investments against uncertain market conditions.

Protect your investments

NEXT STEPS

To invest or find out more, you may approach one of our Franklin Templeton authorised distributors:

FIND OUT MORE

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