SOUTH AFRICA - As market volatility continues, investors should be patient and not attempt a short-term switch into cash, advised Justin Taurog of Investment Solutions.
Taurog explained that any switch could be timed incorrectly as the markets are likely to remain volatile until a measure of calm returns to the world. He recommended that clients focus on their long-term investment strategy, as it is unlikely that anyone will gain from short-term trading.
“If investors want to make tactical changes to their portfolios, these should be done in a considered manner and not be panicked reactions, which will invariably be poorly timed, said Taurog.
Taurog said that people taking early retirement from defined contribution funds may want to postpone a decision until the markets have stabilised.
IS added that clients must be aware of market turnaround times and the fact that a switch may leave them wounded because of the delay in getting out of the market. “If markets bounce quickly they would forfeit the recovery opportunity, said the firm.
By the same token, Taurog said investors could switch and the markets may keep falling for days. “But long term investors should stay invested, and one hopes that investors have been correctly risk profiled so that they will be protected by their asset allocation, he concluded.
By Janet Du Chenne
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