Why has my Equity100 portfolio experienced such volatility, especially in 2022, and how has this impacted my investments?
Global financial markets entered a bear market in 2022 following the start of Russian-Ukrainian conflict, which further strained global supply chains with China’s Zero-Covid lockdowns. Also, happening in the backdrop is the quantitative tightening which saw interest rates rising in order to dampen inflation.
How is the Equity100 portfolio designed to withstand such volatility?
The Equity100 portfolio offers total equity allocation – well-diversified across sectors and geographies. The portfolio, similar to our other Core portfolios, is managed with our Smart Beta Strategy, providing you with semi annual rebalancing so your portfolio stays relevant with any factor tilts.
When we step back to take in the panorama of a five-year horizon, our Equity100 portfolio continued its outperformance this year against peers and benchmarks. That said, some volatility in the short-term is still expected, and with such a portfolio investors are recommended to consider making regular systematic top ups or dollar cost average (DCA).
What is DCA investing?
DCA, or Dollar Cost Average, is investing a fixed amount of money into a particular investment at regular intervals. Although usually done monthly, you can also do it weekly or quarterly.
The benefit of DCA investing is that it inculcates good investing habits. Knowing that timing the market is extremely hard, and that instead of waiting for a “good time”, your funds are better deployed for opportunities that you might have missed waiting. In addition, by investing regularly, you would reduce any drawdowns felt during an adverse market, giving you a better recovery point.
DCA investing also gives potentially higher returns on your portfolio compared to a lump sum investment.