Portfolios designed to mitigate volatility or with lower-risk strategies that can help investors stay invested through tougher environments and be positioned for future recovery
Financial markets face an ongoing threat of extreme volatility as the global economy copes with multiple challenges from inflation, rising interest rates and geopolitical risk. But withdrawing in tougher times can be self-defeating, as it is almost impossible to time market inflection points.
Equity and fixed-income portfolios can offer different approaches to reduce downside risk. Providing a smoother pattern of returns can help bolster investor confidence to stay invested through tougher times and to be positioned for future recovery.
Volatility is a challenge that has vexed investors for decades
The Challenge
Volatility is a challenge that has vexed investors for decades. Markets always move in cycles, through peaks and troughs. Many investors understand the importance of staying invested but find it challenging to stomach falling asset values when uncertainty strikes. And severe losses may prompt emotional decisions that can be destructive to long-term financial goals.
Investors can avoid this trap by deploying strategic solutions to actively address volatility. Diversification remains the bedrock of good risk management. But to consistently combat volatility, portfolio managers must understand the sources of volatility at the company/issuer level and identify fundamental resilience when markets are being rocked by unpredictable macroeconomic forces.
With a clearly defined approach to mitigating volatility in a disciplined investment process, investors can discover equity and fixed-income portfolios that suit their risk appetite, help smooth return patterns and deliver a rewarding long-term experience through changing market conditions.
Investment Solutions
AB offers several volatility-aware solutions. These include equity portfolios that aim to fall less than the broader market in downturns, flexible approaches that adapt to changing conditions and a single-sector allocation to healthcare, which offers defensive characteristics. In fixed income, a focus on short-dated credit markets with less interest-rate risk can help reduce volatility.
The value of an investment can go down as well as up and investors may not get back the full amount they invested. Capital is at risk.
The Portfolio/Fund is meant as a vehicle for diversification and does not represent a complete investment programme. Prospective investors should read the Prospectus, which includes Sustainability-Related Disclosures, and discuss risks and the Portfolio's/Fund’s fees and charges with their financial advisor to determine if the investment is appropriate for them. The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams and are subject to revision over time.
AB offers open-ended Luxembourg-based funds under AB FCP I, a mutual investment fund (fonds commun de placement) organized under the laws of the Grand Duchy of Luxembourg and AB SICAV I, an open-ended investment company with variable capital (société d’investissement à capital variable) incorporated under the laws of the Grand Duchy of Luxembourg.
Not all of the strategies and products we offer are available and/or registered for distribution in all jurisdictions. The sale of funds may be restricted or subject to adverse tax consequences in certain jurisdictions.
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