Iran war: the importance of a balanced portfolio

It remains the case, that if you hold a well-balanced portfolio, aligned to your long-term goals, then the best thing to do right now is, generally, nothing.

But what if you don’t already have diversification built into your portfolio? We’ve been looking at what types of investments add resilience, in times of market shock.

Use the player icons above to listen on your favourite podcast app, or read the full transcript below.

This podcast was recorded on March 16 2026 and all information was correct at the time of recording.

Nothing in this podcast is personal advice – you should seek advice if you’re unsure what’s right for you. Investments rise and fall in value, so you could get back less than you invest. And past performance is not a guide to the future.

Full podcast episode transcript

[0:06] Emma Wall: Hello and welcome to the Switch Your Money On podcast from Hargreaves Lansdown. I’m Emma Wall – Chief Investment Strategist.

[0:11] Matt Britzman: And I’m Matt Britzman – Senior Equity Analyst.

This is your Investment Special – and, unsurprisingly, our main focus is still on the Iran conflict and the impact on global markets.

[0:21] Emma Wall: Yeah, it’s pretty choppy environment out there at the moment, with volatility above normal levels. Markets have been swinging around – so stocks have been up and down, bond yields have been up and down – and all of that is being driven by the price of oil, which also has been up and down, although mostly up. And the reason why markets – both stock and bond markets, and, indeed, other commodity markets – are reacting this way is, they’re trying to work out how long these oil prices stay elevated for – ...

[Pause]

[0:56] Emma Wall: ...and the reason why this is important is, longer-term higher oil prices begin to have an impact on potential inflation – and, indeed, could even slow economic growth – or, indeed, send nations, in extreme circumstances, into recession. And that’s really what markets are trying to work out at the moment – you know, ‘How long does oil stay elevated for?’ – ‘What impact will this have on inflation?’ – and, ‘What impact will this have on economic growth?’

So, although our base case is that this war does not last years, we think it’s a case of weeks – it is worth stepping back and thinking about, actually, what sort of resilience you need in a portfolio to weather these shocks – and make your portfolio (although there are no guarantees) as robust as possible when you are experiencing these sort of heightened periods of volatility – and we think this is best done through a balanced portfolio.

So, the first thing, I think, to say is that we understand why the markets are feeling like this – even if we do think it’s transitory... you know the photos of tankers on fire is quite an emotive thing for people as much as markets – and it’s all really focused on this Strait of Hormuz – which, before a few weeks ago, not many people probably knew about, but now it seems to be in every newspaper headline, and every investment commentary. And the reason why this very narrow strip of water is important is, 20 per cent of daily oil flow – in normal circumstances – goes through this Strait, and 25 per cent of daily flow of liquified gas goes through it as well. And so, when this is disrupted, it means the global trade in oil is disrupted, and hence why you have these fears about elevated prices... you know, oil prices have topped $100 a barrel a few times in the last week, despite the fact that the International Energy Agency group of countries that produce oil have all agreed to release 400 million barrels of oil from reserves – and what we’re seeing here is fear driving the market – and it does have some echoes of what we saw earlier in the year of the AI-disruption story, where we saw, actually, this news that these new AI models were being released – and you saw significant sell-offs in software companies (which we discussed in an earlier podcast, didn’t we, Matt?), and also legal firms and financial services companies – and we sort of called that ‘A baby out with the bathwater’ trade... in that, rather than focusing on fundamentals and long-term financial stability and profitability of these companies, the fear trade swept it all out.

We’re seeing a bit of that with this trade, at the moment, as well. So, rather than thinking about the long-term fundamentals of companies – and, indeed, countries and supply chains – there’s a lot of fear driving the market.

[3:43] Matt Britzman: Also, interesting point that I’d make on that, Emma, is that... almost, encouragingly – to some extent – we’ve not seen a major stock price reaction, as of yet, from this conflict – which suggests, I think, two things. One is – as you said – I think the base case, more broadly, is that this isn’t gonna be a long-term conflict – or have a long-term impact on markets – but, I think, secondly (and perhaps more interestingly) is that it kind of feels as if markets are a little bit more resilient now than perhaps they have been in the past.

Just thinking to first principles from that... I think part of that is because we’ve had so much volatility in the last year-and-a-half – Trump’s presidency perhaps kicking that off. It’s encouraging to see that markets are able to take some of these short-term impacts in their stride a little bit more – but, shifting gear from equity markets, Emma – because it’s also having an impact on bond markets as well – so gilt yields are on the rise...

What’s our take on that?

[4:40] Emma Wall: Yeah – you’re very right in terms of that market resilience – and in terms of how acute some of the sell-offs should be – and we should caveat that doesn’t mean that markets can’t go down from here, but we do, as we’ve said, think this is a transitory disruption, rather than a multi-year issue causing a global financial crisis.

On the gilt-yield point of view... I mean, gilts – quite interestingly... although they’re a safe-haven asset – or a perceived safe-haven asset – which could mean you see demand go up... Although that’s true in times of uncertainty – gilts become very attractive – the dynamic we’re seeing at play here is gilt yields are going up because of this expectation that, actually, interest rates will rise in the UK – and, indeed, we’ve seen it across the pond, in the US, as well – and that’s that fear of inflation flowing through.

So, prediction markets have gone to anticipating cuts through this year – as the trajectory of inflation came down, and monetary policy came down with it... actually, now, markets are more pricing in holds and, indeed, rate hikes through the year. We do think, however, that’s, again, swung too much an extremist – we don’t think that we’re gonna see lots of rate hikes through 2026... we have a more measured house view – that we do think that, while this war is ongoing, it is likely that rates are held – both in the US and the UK – and, indeed, actually, in Europe – but, actually, once the transitory and oil-price elevation flows through, we do think we’ll resume the cutting cycle to a more neutral rate of around 3%.

And so, what we’re thinking about – in terms of how gilts should be used... we should be mindful that they do add diversification – and, indeed, that they have that longer-term total return trajectory (although there are no guarantees) – and we think gilts can add resilience in a portfolio – particularly if you’re at that stage in your investment journey when you are approaching retirement or in retirement, where gilts could provide some retirement income, and really add diversification to an equity portfolio.

[6:40] Matt Britzman: Yeah – and, shifting gear again, I guess... you’ve been speaking and written about this recently, actually – that, sometimes, when markets are volatile, the best thing to do can actually just be nothing. So, taking a step back – thinking about how portfolios are built in the first place – the different types of investments, the different assets, the different styles that are on offer for investors... this quality focus has been out of favour, I guess, in recent years.

Is this something that we think is gonna have a comeback – and do we think this is the type of investments that investors should be thinking about if they don’t already have in their portfolios, potentially looking to make sure that they have this diversification across styles?

[7:22] Emma Wall: Yeah, it’s a good point.

I mean, saying, ‘Just do nothing’ hides the hours and hours of work that I know you, Matt, and myself, and the rest of the team have done in terms of reading about scenario analysis – what markets could do... But, really, in times of volatility, if you have a well-diversified portfolio – with different styles, different asset class, different geographies – that is allocated in a way that aligns to your risk appetite and investment horizon... although markets are painful at the moment, the best thing to do is nothing – and that remains our house view. What I would say, though, is that statement relies on the fact that you already have a well-diversified portfolio in order for it to be the best investment philosophy.

So, if you don’t already have diversification built into your portfolio, one of the things that we’ve been looking at is, ‘What types of investments add resilience in terms of market shock?’ – and, really, what we’re looking at there is that word, ‘Quality’ that you mentioned. So, quality bonds include those that are deemed by ratings agencies least likely to default in times of stress – and that includes companies, but also countries. So, we’ve talked about gilts – could also talk about T-bills (which are treasury bonds from the US) – and quality stocks also have very specific attributes.

So, these are companies that are most likely to be resilient in times of economic uncertainty (although there are no guarantees). They offer products and services that actually remain in demand, almost regardless of what’s going on in the macroeconomic backdrop – and we think it’s those types of companies that would be great additions to portfolios to add diversification – particularly, actually, if you’ve had a momentum-driven portfolio over the last few years, which will have naturally led you to have a growth bias – or, indeed, some deep value - because, at different times over the last five years, both growth in the terms of tech and value have done well, and have been popular over the last five years – so quality could add that diversification.

Which, kind of where I turn to you, Matt, as our resident stock expert... perhaps you could give some examples of companies that you think display these attributes – where they often have low leverage, high return on investment, dependable revenue and profit streams, and that economic, agnostic nature...

[9:46] Matt Britzman: When we’re thinking about these kind of attributes... perhaps, if you’re going down the fund-investing route, then you can find the fund that has that as its aim, but things are little bit more difficult when you’re looking at individual companies.

So, I’m glad that you’ve called out some of the underlying attributes that a company needs to have – so, like you said, higher returns – predictable and resilient earnings – perhaps strong cash generation as well. So, one of the things that we look at is what we would call as ‘Earnings quality.’

So, a company can have strong earnings, but is it backed by cash flows? – because those are the most valuable earnings that you can have – and there’s a few different ways in which you can look at that – but, by digging into some of the financials of these companies, you can really start to see these attributes in the numbers, and that’s what we’ve been looking at.

Now, one of the stocks that I think resonates a lot of these attributes and qualities is one that we’ve actually spoken about in the last couple of podcast episodes, with RELX – which, in actual fact, has been a stock that’s sold off as part of what has been called the ‘Saas-pocalypse’ in recent months... but, when you dig down a layer, and look at these underlying numbers, a lot of them are really high-quality.

So, you know, this is a company that – on average, over the last five years, it’s only spent 5% of its revenues on capital expenditure. So, it’s a capital-light business – it doesn’t have to throw loads of cash at growing its business leverage – so the debt levels have been relatively consistent, again, for the last five/10 years.

I think, on the debt point, it’s interesting to say that we’re not necessarily saying there has to be no debt, but we’re saying that we wanna see consistent levels of debt – or debt that can easily be serviced by the cash flows. So, another thing to look at is, ‘What are the profits and cash flows relative to the interest payments on debt?’ – and you can get those numbers from the income statement as well.

When we look at RELX... you know, 54% of its 2025-revenues came from subscription services. The rest was transactional, but most of those are actually long-term contracts as well – so that fits that kind of box of stable and resilient revenues.

When we look at some of the growth numbers that we’ve seen over the past five years... you know, revenue growth has trended between 7% and 9%, consistently, over the last five years – margins have been improving over that time period. Earnings – you know, the bottom line – the profit numbers – adjusted earnings per share anywhere between 9% and 17%... again, relatively consistently over the last five years. So, there’s a lot of those fundamental financial metrics that we wanna see in a quality business.

Now, RELX also has some good pricing power in the markets that it operates – it’s a data-analytics business, so you would hope that those revenue streams are relatively resilient, irrelevant of the economic environment.

So, for us, it’s one of those names where we can now marry up a high-quality business – the valuation’s come under pressure over the last six months. We think, to some extent, rightly so, but we do believe that it’s gone a little bit overboard – and, when you marry those two things up, I think that’s potentially not attractive opportunity for RELX, now.

Now, obviously – as I said – it has its own risks – the AI disruption risk has reared its head and is definitely something that we think is valid... so something to watch for investors on that name.

[13:07] Emma Wall: Thanks, Matt.

Before you go onto your other stocks you wanted to highlight, I think it’s worth letting our listeners know that you and a couple of other equity research team also hold RELX, don’t you?

[13:17] Matt Britzman: Yes, that’s correct.

Shifting gear to the States, I’m thinking about one of the largest tech companies (or largest companies, for that matter, in the world), with Apple.

Now, I think Apple’s a really interesting case at the moment. Again, from thinking about those quality elements, it has a lot of them – robust earnings, an incredible brand – one could easily argue, one of the best brands in the world. With that quality brand, you get this consumer confidence – you have people that upgrade – you have buyers coming back. Even, think about things with iPhones, Emma... you know, you might put off, when you upgrade your phone – but, eventually, you’re gonna buy a new one – and, a lot of the time, people are stuck in this ‘Apple ecosystem’ (as it’s called), and you end up buying another Apple phone anyway. So, that has that recurring-revenue element to it as well.

One of the most interesting things about Apple at the moment is... we’ve been fairly critical, I think (would be fair to say) in the last year or so, with Apple’s AI investment, AI rollout, and AI strategy. We had Apple Intelligence launched last year – and it was... you know, ‘A flop’ would be a fair analysis, I think. They’re not building their own models – it does seem a little bit scarce as to what their strategy is, here.

Now, we’re expecting to see a new version of Siri come out this year – they’re partnering with Alphabet (with Google) to get Gemini as the model to back up that. But the flipside of all of this is that they’re not investing heavily. We don’t see the $100bn-plus CapEx guides that we’ve seen from some of the other major tech companies – and that’s actually positioned Apple now in this interesting position, where it’s got a very different capital structure and profile, now, to the rest of those major US tech companies – and we actually think that, now, that offers this diversification angle – more so, perhaps, than has ever existed in the past – that can offer a little bit of a buffer, so to speak, if this AI build-out and rollout doesn’t quite happen as quick or fast as the markets suspect.

So, it’s kind of got that interesting juxtaposition now, where the failed rollout of AI, to some extent, has improved its diversification characteristics. So, we think it’s an interesting name, at the moment, that fits a lot of those quality characteristics, but also now has this diversification element to it as well.

Now, obviously, the risks to this are that, if AI does proliferate – if owning your own model becomes super-important – then they have dropped the ball on that.

[15:50] Emma Wall: And I know you’re got a third stock example as well from, again, a completely different sector, haven’t you?

[15:54] Matt Britzman: Yeah, exactly.

So, flipping now to UK insurance... to some extent, traditionally, not the type of company that may fit the quality bucket – or all of it – but we think that there’s quite a lot of attractive things with Admiral at the moment – so the car insurance company that operates in the UK (and, to some extent, in Europe).

Now, the quality elements of Admiral, I think, come around the business model, the management team – and how it’s acted and reacted to shifting markets over a long period of time. Admiral has, for a long period, been one of the best-returning insurance companies, through the cycles. That means that it’s been performing better than peers through upturns in the market and downturns in the market – and we think that’s a really important element, if you’re looking for that quality diversification to add to a portfolio.

Now, Admiral, at the minute, has been a company that we’ve liked for a while. It hasn’t had a valuation that we’ve thought as being overly-attractive up until the past few months – when it came under a bit of pressure from two factors. One is the pricing market for UK car insurance came under some pressure towards the back end of last year – and that feeds through into earnings into 2026 and 2027 – and then, secondly, it was slightly caught up in that AI sell-off again... you know, we think ‘Baby thrown out with the bathwater,’ to some extent there. But those, I think, two elements have provided a reasonably attractive opportunity for Admiral – which is a high-quality name within the insurance sector. And also, thinking about diversification for those that are looking for income... it does have a reasonably attractive – [s.l. given the yield as well 17:31], although no returns are guaranteed.

[17:34] Emma Wall: Thanks, Matt.

Worth reminding our listeners, at this point, that investing in an individual company isn’t right for everyone – because, if that company falters, and the share price goes down, you lose, of course, all of your investment – and, if you can’t afford to do this, investing in a single company probably isn’t right for you – and, instead, you should think about diversifying with other shareholdings – or, indeed, a collective, such as a fund, an ETF, or investment trust – and you should always make sure that you understand the companies you’re investing in and their specific risks.

[18:01] Matt Britzman: Thanks, Emma – and that’s all for this week.

This session was recorded on March 16^th 2026, and all information was correct at the time of recording. Next week, Helen Morrissey and Clare Stinton are back with another Personal Finance episode.

[18:14] Emma Wall: Nothing in this podcast is personal advice, and you should always seek advice if you’re unsure what’s right for you.

[18:19] Matt Britzman: And investments rise and fall in value, so you could get back less than you invest – and past performance is not a guide to the future.

[18:26] Emma Wall: And, as always, this podcast is not a recommendation to buy, sell, or hold any of the investments or companies that we’ve discussed today, and no view is given on the present or future value, or price of any investment. Investors should always form their own view on any proposed investment.

[18:39] Matt Britzman: As ever, thanks to our Producer, Elizaeth Hotson.

[18:42] Emma Wall: And thank you to you, so much, for listening – we’ll be back again soon. Goodbye!

[18:46] Matt Britzman: Goodbye!