Multi-Asset Global Investing

FOLLOWING the recently concluded US elections, stock market indices showed varied responses driven by investor sentiment, economic conditions, and expectations regarding the policy environment.

The Philippine market had a recent downtrend from the previously uptrend movement after the rate cuts of the US Federal Reserve and the Bangko Sentral ng Pilipinas. Now that we have seen the volatility at this quarter, I would like to share the reasons why Filipino Investors should consider multi-asset global investing.

As a Filipino investor navigating today’s dynamic financial landscape, you’re likely searching for strategies to grow your wealth while minimizing risks. Multi-asset global investing offers a balanced and efficient way to achieve these goals.

Here are the top five reasons why this approach should be part of your investment plan:

1.            Diversification for stability. Multi-asset global investing helps spread your funds across various asset classes—such as stocks, bonds, real estate, and commodities—and across countries. This diversification reduces the impact of any single asset or market underperforming, making your portfolio more resilient to local and global economic uncertainties.

2.            Access to global growth opportunities. By investing globally, you gain exposure to high-growth regions and industries that may not be readily available in the Philippine market. For instance, emerging markets in Asia or tech-driven economies in the West provide opportunities for greater returns, especially during periods of rapid growth in those areas.

3.            Protection against local risks. A globally diversified portfolio helps shield your investments from risks specific to the Philippine economy, such as currency fluctuations, inflation, or market volatility. By spreading your investments across different regions, you’re better positioned to weather economic downturns locally or globally.

4.            Flexibility to adapt to changing markets. Multi-asset global strategies are dynamic, meaning they allow for adjustments as market conditions change. For example, fund managers can shift allocations to favor regions or asset classes performing well, ensuring your portfolio stays aligned with growth opportunities while managing risks.

5.            Expert management for better results. Global multi-asset funds are typically managed by experienced professionals who analyze market trends and implement strategies to optimize returns. As a Filipino investor, this provides access to world-class expertise, saving you the time and effort of managing complex global investments yourself.

Incorporating multi-asset global investing into your portfolio gives you the benefits of diversification, access to international markets, risk management, and professional oversight. This approach positions you to take advantage of opportunities worldwide while safeguarding your investments for the future. It’s a smart choice for Filipino investors seeking sustainable, long-term growth.

Investing can be a powerful tool to grow your wealth, but it’s important to approach it carefully. Here are the key things to consider before you start investing:

1.            Define your financial goals.

• Short-term vs. long-term goals: Are you saving for a vacation, your child’s education, or retirement? Your goals will determine your investment horizon and strategy.
• Clear purpose: Knowing why you’re investing helps in choosing the right assets.

2.            Understand your risk tolerance.

• Risk appetite: Assess how much risk you can handle. This depends on factors like age, income, and financial stability.
• Risk-reward balance: Higher returns often come with higher risks, so align your investments with your comfort level.

3.            Educate yourself about investment options.

• Types of investments: Learn about stocks, bonds, mutual funds, ETFs, and other instruments.
• Pros and cons: Understand the benefits and risks associated with each investment type.

4.            Assess your financial situation.

• Emergency fund: Ensure you have 3-6 months’ worth of living expenses saved for emergencies.
• Debt status: Pay off high-interest debt before investing to avoid financial strain.
• Cash flow: Know how much you can afford to invest without affecting your daily needs.

5.            Choose the right investment strategy.

• Active vs. passive investing: Decide if you want to manage your investments actively or prefer a hands-off approach.
• Diversification: Spread your investments across asset classes and industries to reduce risk

6.            Understand costs and fees.

• Expense ratios: Check the fees charged by mutual funds or ETFs.
• Transaction fees: Consider brokerage charges for buying or selling investments.
• Taxes: Be aware of how taxes may impact your returns.

7.            Time horizon.

• Short-term investments: Choose safer assets like money market funds or bonds if you need the money within a few years.
• Long-term investments: Equities or growth-oriented funds may be suitable for long-term goals.

8.            Stay informed about market conditions.

• Economic trends: Monitor interest rates, inflation, and market performance.
• Global events: Economic policies, political changes, and global events can affect your investments.

9.            Evaluate investment platforms.

• Reputation and regulation: Ensure the platform is regulated and reliable.
• Accessibility: Check if the platform offers tools and resources to support your investment journey.

Investing requires a blend of planning, education, and discipline. By considering these factors and starting with a clear strategy, you can maximize the potential for financial success while managing risks effectively.

Karlo Biglang-Awa is a Registered Financial Planner of RFP Philippines. To learn more about investment planning, attend the 109th RFP program on January 2025. Inquire how to join the program at info@rfp.ph. The author’s views expressed in this column do not necessarily reflect those of the BusinessMirror’s.