Conventional wisdom holds that the slice of any portfolio put into mutual funds is going to be there for the long term.
However, smart investors also know that market volatility spells opportunity, so they are taking profits where appropriate and actively considering funds that reflect changing economic trends and are forecast to give consistently higher returns.
'It is not a time to panic, particularly if you are a medium to long-term investor,' said Jon Dingley, managing director of TTG (HK). 'But, in general, we recommend that our clients crystallise some of their profits gained from long-only equity funds over the past few years and increase exposure to certain alternative strategies or hedge funds.'
While predicting further volatility and 'plenty of it' in the next three to six months, Mr Dingley indicated that investors should take careful note of the potential downside risk of funds in which they were invested. They should make it a priority to review exposure and, if necessary, realign their portfolios. Doing this on a regular basis allowed them to maximise the chance of achieving absolute returns irrespective of the direction of markets.
He said certain investment themes now merited special attention. These included agriculture, water, consumer goods, infrastructure, Asian technology and, above all, China.
'There are some sectors we like, such as agriculture-related commodity funds,' Mr Dingley said.