Why volatility is good news for this type of investment strategy

Volatility might send a shiver down many an investor's spine. After all, humans are hardwired to prefer certainty and consistency. The truth is, however, that volatility often provides an opportunity for outsized returns. It is also when certain investment strategies can shine or offer protection to your broader portfolio.

Take, for instance, the movement to higher interest rates.

The volatility this has created was the source of enormous opportunity for fixed income, relative value and currency trading strategies. Those same strategies languished in a low interest environment for a decade beforehand.

That said, Janus Henderson Portfolio Manager, Steve Cain, points out that those interest rate hikes haven't acted quite like they did historically. We are currently pricing a soft landing rather than any form of significant recession - and it's fair to say consumers have kept spending long beyond expectation. Things have changed.

"One of the reasons why we've not seen the US go into a reverse or a slowdown as fast as we would expect given the interest rate moves that we've seen, is that private credit has disintermediated the regional banking system and it's very hard for the Fed to control something that sits outside the banking industry," he says.

Soft landing or not, uncertainty continues. There's a lot in play across the market, and investors must think about the strategies that support their portfolios. 

In this episode of Views from the Top, Cain discusses how different strategies perform in this environment, why interest rate hikes don't work quite the same way anymore, and his ‘favourite child’ alternative strategy. 

He also discusses why we should be worried about the US fiscal path - it is unsustainable and has global implications.

Timecodes:

0:00 - Introduction
0:19 - What is the purpose of multi-strategy investing?
0:52 - Which strategies have performed best in the last year
1:29 - The changing interest rate environment and alternative strategies
3:12 - Why investors should be concerned about the US fiscal path
5:27 - Event-driven strategies and an example
6:27 - The turnaround in performance for Portfolio Protection
8:53 - Steve's favourite alternative strategy
9:58 - Steve's view from the top (aka why interest rates don't work the same way today)

See alternatives in a different light

To perform differently from the market, you have to invest differently. You can find further information on the Janus Henderson Global Multi-Strategy Fund here, or via the Fund Profile below.

Managed Fund

Janus Henderson Global Multi-Strategy Fund

Alternative Assets

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