How to invest to protect your portfolio in 2020 and beyond
Central banks have vowed to do what ever it takes to ignite economic growth.
Growth is the only thing that will address the Covid-19 unemployment crisis facing the world.
That means there will be a lot of cheap and seemingly “free” money thrown at this problem.
We have several central bankers talking this week and our own monetary policy committee is due to make an interest rate announcement on Thursday.
With an expectation of another 50bps reduction in the prime lending rate, it will take us to 275bps in rate cuts this year.
This week we focus on two investment themes that can withstand this unprecedented amount of stimulus…
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Two of Six investment themes for these uncertain times:
1. Technology and Telecoms
• The new economic landscape will require increased communications and data as productivity apps are widely adopted.
Many companies have seen an increase in employee productivity, so there will be many employees who don’t head to the office but rather work from home.
This will see a demand in tech and telco products and services growing.
• ETF5IT: This is a listed fund that follows US Tech Shares, including Apple, Google, Microsoft, Facebook, Intel and others.
We tipped this ETF first when it was trading below R6, it is now at all-times highs around R11 and reflects the expectation that these products and services will remain in demand.
It is also a Rand hedge.
2. Structured Products and Crypto
• Structured products add upside (sometimes a known amount) with capped or no downside, over the long term these smooth out a portfolios risk profile.
A small portion of a portfolio invested in crypto
can add a significant amount of diversification and alpha to a portfolio. This has assisted in delivering returns within a broader portfolio with as much risk as an equity portfolio.
For individual recommendations to profit from the above themes that offer attractive prospects send an email to firstname.lastname@example.org
with “Investment Themes” in the subject line and we will get back to you.
See you next week.
Contributing Editor, Money Morning