Sponsored column: The unpredictable global risks at play that make managing a portfolio challenging

Carolyn Black, associate director, Myddleton Croft Investment Managers
Carolyn Black, associate director, Myddleton Croft Investment Managers
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With all eyes in the UK focussing on the ongoing Brexit negotiations, some investors may have inadvertently glanced away from the bigger picture, where several very real geopolitical issues are lurking.

Overseas, the UK’s Brexit situation is considered to be ‘old news’ as traction is growing around global issues such as cyber-attacks, trade wars, populist unrest, tensions in the Middle East, North Korea’s next move and recent activity in the South China Sea. Though very real, and intensifying, these risks are difficult to time and to quantify.

It is therefore tricky to determine which should be prioritised and swiftly acted upon. With a US carrier ship now stationed in the South China Sea and the UK military on its way to the region, what makes this a lesser or greater issue than the potential populist uprising bubb-ling under the surface in Italy?

The trade wars between America and China are certainly gathering pace ahead of the American mid-term elections. Whether the imposing of tariffs between the two countries slows down or accelerates post the November elections, is dependent on Donald Trump’s attention span and whether another ‘project’ takes his fancy in the meantime!

For now, 11 per cent of Chinese exports are subject to US tariffs, resulting in price increases of 2.3 per cent to American consumers of Chinese goods. China has placed tariffs on US farming exports in retaliation and could go further if Trump increases pressure. The larger the numbers, the farther reaching the impact of the tariffs.

Managing portfolios is challenging when there are so many unpredictable global risks at play.

The key is to remain nimble and flexible when adopting an investment strategy and to seek opportunities which are not solely reliant on global stock markets for performance.

Indeed, some alternative investments which have low correlation to the markets have been producing some promising returns. This could well continue to be the case as the uncertainty surrounding wider geopolitical issues looks set to continue unabated.