The last few weeks have been busy, confusing, surprising and very volatile to say the least.
After President Trump’s ‘Liberation Day’ tariff announcement on 2 April, markets fell. Quite a lot.
There was talk of recession, soaring inflation and even stagflation (slow growth, high unemployment and high inflation all at the same time – a combination economists hate above all others).
Then on 12 April Trump rolled back tariffs, giving a 90-day breathing period when he would employ tariffs of ‘just’ 10% across the board, rather than the higher rates he’d previously imposed.
The market breathed a sigh of relief and rallied, albeit not quite back to the levels pre-Liberation Day.
In the latest episode of the ongoing Trump drama, he called Jerome Powell, Chairman of the Federal Reserve (Fed), ‘a major loser’ and made comments which brought into question the Fed’s independence.
The US market fell. Again. And then rose. Again.
What could be next for stock markets?
I can’t tell you where tariffs will end up, or what Trump will say next that will send shockwaves through stock markets.
What I can be pretty sure of is that the next few months, and quite possibly years, are likely to be more volatile than the last few.
As investors, volatility isn’t always comfortable (although it can present opportunities).
So, what can investors do to manage market volatility and make their portfolios more robust?
3 strategies to help you invest during uncertainty
Be patient
When you invest you should have a long timeframe in mind.
Over the course of days, weeks and months, markets will go up and down. Over the course of much longer timeframes though (at least five years) history shows us that investments are far more likely to gain value, although of course this isn’t guaranteed.
It’s really hard when things are so volatile, but sometimes the best strategy is to not look at your investments every day. Instead, try to only check in once a month or once a quarter and to keep in mind that you’re in this for the long haul.
Diversify
We say this frequently, and we’ll continue to do so. Diversification is your friend.
The only investment that you can guarantee won’t lose money is cash (although even this loses value over time as prices rise and your cash can buy you less).
There are, however, certain investments which behave a bit differently to shares and can help make your portfolio as a whole more robust.
These are things like bonds, gold and infrastructure.
Adding one or more of these into your portfolio could be a helpful tactic.
Alternatively, buying a fund which invests in several different types of investments could do this in one go.
Reduce risk
For some people, who are cautious about investments going down, investing in lower risk assets like bonds or total return funds might be a good tactic.
These investments could still lose money, particularly over the short term, but should have less extreme ups and downs than the global stock market.
This article isn’t personal advice. If you’re not sure an investment is right for you, ask for financial advice. Remember, all investments and any income from them can rise and fall in value, so you could get back less than you invest. Past performance also isn’t a guide to the future.
3 fund ideas to help manage stock market volatility
Here are some ideas of funds that could help to preserve the capital value of a portfolio over time, although of course there are no guarantees.
Investing in these funds isn’t right for everyone. Investors should only invest if the fund’s objectives are aligned with their own, and there’s a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.
For more details on each fund and its risks, use the links to their factsheets and key investor information.
Ninety One Diversified Income
The Ninety One Diversified Income fund is an income-focused total return fund.
Total return funds are more conservative than funds that invest fully in company shares and aim to shelter your money when stock markets fall. This can be valuable in more turbulent market conditions like those we’ve seen of late or for anyone who’s worried about seeing the value of their investments decline.
Nothing is guaranteed though, and these funds can still lose money, particularly over shorter time periods.
The Ninety One Diversified Income fund focuses on providing income mainly through investing in bonds, with a smaller part of the fund invested in shares.
The fund invests in emerging market bonds, high-yield bonds and derivatives, all of which add risk. It also takes charges from capital, which increases the income paid but reduces the potential for capital growth.
The focus on income means that it might behave a little differently to more growth-focused funds, providing diversification in portfolios.
At the end of March, the fund was yielding 4.92%.
Remember though, yields are variable and no income is ever guaranteed.
Annual percentage growth
31/03/2020 to 31/03/2021 | 31/03/2021 to 31/03/2022 | 31/03/2022 to 31/03/2023 | 31/03/2023 to 31/03/2024 | 31/03/2024 to 31/03/2025 | |
|---|---|---|---|---|---|
Ninety One Diversified Income I Accumulation GBP | 14.18 | -1.31 | -1.32 | 4.20 | 4.71 |
IA Mixed Investment 0-35% Shares TR | 12.24 | -0.13 | -5.97 | 5.88 | 3.42 |
Troy Trojan
The managers of the Troy Trojan fund look to take advantage of the diversifying attributes of gold without putting all their eggs in one basket.
Rather than trying to shoot the lights out, the fund aims to grow investors' money steadily over the long run, while limiting losses when markets fall.
The fund is focused around four 'pillars'.
The first contains large, established companies the managers think can grow sustainably over the long run. These sorts of companies often outperform the broader market during difficult times.
The second is made from bonds, including US index-linked bonds, which could shelter investors if inflation rises.
The third pillar consists of gold-related investments, including physical gold, which has often acted as a ‘safe haven’ during times of uncertainty.
The final pillar is ‘cash’.
This provides important shelter when markets stumble, but also a chance to invest in other assets quickly when opportunities arise.
While the fund contains a diverse range of investments, it’s concentrated. This approach means each investment can contribute significantly to overall returns, but it can increase risk. The fund can invest in smaller companies which can increase risk.
Annual percentage growth
31/03/2020 to 31/03/2021 | 31/03/2021 to 31/03/2022 | 31/03/2022 to 31/03/2023 | 31/03/2023 to 31/03/2024 | 31/03/2024 to 31/03/2025 | |
|---|---|---|---|---|---|
Trojan X Accumulation | 9.43 | 12.92 | -2.50 | 3.49 | 6.25 |
UK Retail Price Index | 1.47 | 8.96 | 13.51 | 4.30 | 3.21 |
FTSE All-Share TR | 26.71 | 13.03 | 2.92 | 8.43 | 10.46 |
Pyrford Global Total Return
This is another total return fund and aims to deliver a return ahead of inflation over the long term.
While it won't shoot the lights out, the managers try to grow investors' wealth modestly over the long run, without all the significant ups and downs of investing fully in the stock market.
We believe this makes it a great option for a more conservative portfolio, or a way to bring some stability to a broader investment portfolio. Like all investments, it will still rise and fall in value, so investors could get back less than they invest.
The team behind the fund is made up of a number of highly-experienced investors, including Tony Cousins who leads the team.
The team invests flexibly in different assets, while aiming to keep things simple. They typically focus on three main assets – shares, government bonds and cash.
The shares are expected to perform well and generate most of the fund's growth over the long term, but they can be quite volatile in the short term.
They can invest in companies across the globe, with the flexibility to invest in emerging markets, which increases risk if used.
The bonds and cash are expected to perform differently, and bring some stability to the portfolio.
Please note as this is an offshore fund you aren’t usually entitled to compensation through the UK Financial Services Compensation Scheme.
Annual percentage growth
31/03/2020 to 31/03/2021 | 31/03/2021 to 31/03/2022 | 31/03/2022 to 31/03/2023 | 31/03/2023 to 31/03/2024 | 31/03/2024 to 31/03/2025 | |
|---|---|---|---|---|---|
Pyrford Global Total Return Sterling C GBP Acc | 8.66 | 4.15 | 1.36 | 4.72 | 5.11 |
UK Retail Price Index | 1.47 | 8.96 | 13.51 | 4.30 | 3.21 |