Nonetheless, Barclays Wealth believes that too much bad news is already included in asset prices and advises clients against trying to fine tune short-term market moves.
“Taking a three month and longer perspective, we recommend sticking with a diversified long-term investment portfolio that contains a slightly larger weighting in risk assets than usual,” Kevin Gardiner, Head of Investment Strategy EMEA, said.
“This should allow investors to benefit from the stability that will eventuate if we’re right about the euro not breaking up, large governments avoiding default, and developed world companies operating profitably and slovenly,” he added.
“For those risk averse clients who seek shelter in safe haven assets, we favour cash over core government bonds, currencies or gold.”
Barclays Wealth currently recommends for a moderate risk portfolio a 36% allocation to Developed Markets Equities and an 8% allocation to Emerging Markets Equities.
The 2012 may contain a few new surprises for investors, yet one challenge is expected to remain: the hunt for yield. Rather than reaching only for returns, Barclays Wealth recommends investors consider a range of opportunities: fixed income, equities and the so-called ‘real’ assets of commodity futures and real estate. Each of these assets could prove useful for investing in the current low yield environment.
Research shows that on average it takes around 65 days for a new virtuous habit to become automatic. When it comes to investing, the following self-control strategies can make a significant difference: the ability to take a holistic view – making decisions one-by one can result in a poor overall allocation of wealth and liabilities; the ability to understand one’s own financial personality; a willingness to invest time and thought in asset allocation – ensures investors only take those risks they feel comfortable and for which they are compensated; minimising concentration risk – successful investors examine their overall wealth and think about how they can reduce the impact of random events; implementing a rebalancing plan; tailoring portfolios to their own financial personality – can protect from personal weaknesses and thinking ahead – planning for the inheritance execution and trust planning; seeking different perspectives – additional opinions can reduce the probability of mistakes.