Investing with confidence when volatility is the new normal
The unifying objective remains diversification, particularly across assets that behave differently from one another. Uncorrelated assets are central to portfolios designed to perform through varying market conditions. Diversification is not about chasing every opportunity, but about constructing balance. When one part of a portfolio is negatively affected by global, regional or domestic events, another part may benefit from those same conditions.
Portfolios with energy exposure benefited, others lagged. However, there are some clear illustrations in recent history that provide insights into asset performance.
At the same time, other assets played a valuable supporting role. Gold and commodities performed strongly as investors sought protection against inflation and geopolitical risk. Infrastructure and select real assets offered inflation linked cash flows, while short duration fixed interest provided relative shelter as interest rates rose. In contrast, long duration bonds suffered as yields climbed, eroding capital values.
Private capital markets also faced challenges, with liquidity constraints and tighter regulatory scrutiny complicating the environment. Listed markets are already signalling this risk through discounts to net asset values (NAV) and declining private asset manager share prices.
These differing outcomes underline the importance of diversification not just across asset classes, but within them. It also highlights the need for portfolios to evolve. Rebalancing is not about reacting to every market wobble, but about recognising medium to long-term trends and adjusting exposures accordingly. Crucially, these decisions must be aligned to an individual investor’s objectives, liquidity needs and tolerance for risk.
In an increasingly complex investment landscape, trusted advisers remain central to effective wealth management. The value they bring extends beyond asset allocation models. It includes access to global opportunities, disciplined risk management, robust research and an understanding of how portfolios fit into broader financial and family goals. For many investors, particularly those with intergenerational considerations, this integrated approach is a significant consideration.
Investing ultimately requires patience, perspective and preparation. It can begin with a first investment in a share, exchange traded fund or property, and scale over time into sophisticated structures supported by teams of experts. The principles, however, remain consistent: diversification, discipline and a clear understanding of why each investment exists within a portfolio.
When investors ask when a good time to start is, the answer is almost inevitably now. Uncertainty is not an aberration; it is a constant feature of markets. Waiting for clarity often means waiting indefinitely. By focusing on how assets are allocated, how they interact with one another and how they align with long-term objectives, investors can move forward with confidence – even when volatility dominates headlines.
Michael Saadie is executive, NAB Private Wealth and CEO, JBWere
The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on the information in this article, you should seek professional advice and consider whether it is appropriate for you in light of your objectives, financial situation and needs. Terms, conditions, fees, charges, eligibility and lending criteria apply to NAB products. © National Australia Bank Limited ABN 12 004 044 937, AFSL and Australian Credit Licence 230686.