Staying sane in a volatile market

Published November 2nd, 2015 - 11:28 GMT

Gautam Duggal of Standard Chartered has been getting calls at midnight from anxious investors asking about market movements. His mantra is being in constant touch with investors would imbibe confidence in them.

“Our Wealth management advisors are in regular contact with our clients. But sometimes we do get the late night call asking about the markets. Being responsive during these times and providing a reasonably balanced opinion about the market is important for us to remain a trusted advisor with our clients,” said Gautam Duggal, Regional Head, Wealth management, Africa, Middle East and Europe and Head Wealth Management UAE Standard Chartered Bank, told Gulf News.

“Clients are more patient now and don’t panic immediately. In the last couple of years, there have been several cycles, so clients have better understanding of market conditions and are more patient in their approach to investing. We do see more clients holding on to benefit from cycle changes,” he added.

Nisrag Trivedi, director at Barings Asset Management Company also agreed with Duggal. “Clients are getting more mature than what they were historically. They are realising that such volatile movements with happen, and will happen more frequently than in the past,” Trivedi said.

The large part of that also has to do with the amount of liquidity that has been infused by central bankers across the world, and clients have been using that liquidity to their advantage.

“Going forward we would be in a situation where liquidity won’t be as easy to come by and that would the new environment that investors would have to live in. So accordingly, investors would have to plan and redefine their portfolios,” Trivedi added.

The awareness, maturity and the options available has changed the behaviour of the investors decision that a customers take, even as clients have been sitting on more cash compared to 2014.

“We need to make clients understand why it is important to grow their wealth with sound planning . All of our products and services are centric around the key needs and goals of our client,” Duggal said.

Plan

Along with this, Duggal advises investors to think long term as key to get sustainable, high rate of returns. “We need to make a customer understand that why is it important to plan his future well and plan it in advance, and how does it help in his future planning depending on his need and goals. All of the products are centric around the key components like the need and goals,” Duggal said.

He advises clients to invest during market volatility. “Whenever there is market volatility, opportunities to invest exist. In times of uncertainty, access to good advisors with strong credentials and expertise is critical. Depending on your financial goals, you can start with as low as $200-300,” said Duggal. Advisers should be looking at diversification.

Expectations

“There has been a structural shift in expectations from investors in terms of income generating fund. There are not many products or ideas available that can give you a regular income on their investments due to zero interest rate environment,” Trivedi from Barings said.

“The world is ageing and those could be a few triggers why investors are expecting regular returns. People have slowly started to take baby steps towards products like multi asset income fund,” he added.

He sees investors waiting on the sidelines to see some blood on the street before picking up bargains.

“There are strong trends, one is increasing amount of cash, as they are waiting for the opportunity to see blood on the street. The increased cash is also waiting on the sidelines waiting for the opportunity. If you are putting money regularly in the market and you are using the formula of dollar cost averaging that’s the best way to access this market,” Trivedi said.

And according to him, there could be many reasons for a bloodbath. “There could be multiple factors including the Fed raising the rates. China could be one of the reason, could be short-term trigger for volatility in the market. One thing that worries me too much is a stronger US dollar,” Trivedi added.

By Siddesh Suresh Mayenkar


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