Uncertain times call for strong investment strategies, and one expert asserts that this particular portfolio stands out among the rest.
DWS Global Chief Strategist Urges Diversification in Equity Portfolios
In an October market outlook, Björn Jensch, the global chief strategist for equities at DWS, highlighted the importance of maintaining globally diversified equity portfolios.
Jensch advocates for investments spread across multiple regions to reduce risk and capture growth opportunities worldwide. He recommends a focus on quality companies with strong balance sheets and solid earnings growth prospects.
The MSCI World, with a 75% US weighting and a top-10 share of over 20%, does not offer broad diversification. Alternatively, the SPDR MSCI ACWI IMI UCITS ETF (WKN: A40F93) covers nearly all publicly listed stocks in the global equity universe. The Invesco MSCI World Equal Weight UCITS ETF (WKN: A40G12) and The MSCI World Equal Weight UCITS ETF (WKN: A40G12) are another possible choices for a more diversified global equity portfolio.
The L&G Gerd Kommer Multifactor Equity UCITS ETF (WKN: WELT0B) is another option for a more diversified global equity portfolio. This ETF uses a multifactor approach to select stocks, considering factors such as value, momentum, and quality.
Given current market uncertainties, Jensch suggests incorporating defensive sectors like healthcare and consumer staples into portfolios to help mitigate volatility. He also emphasizes the value of active management to navigate changing macroeconomic conditions and to adjust exposures dynamically.
Jensch is skeptical about growth stocks that have driven markets recently, warning of overheated valuations in certain stocks. Instead, he sees opportunities in value stocks that have struggled recently and in potential undervaluations.
Jensch expects corporate earnings to grow by 5-10% over the next twelve months. However, he warns of the importance of managing currency risks within global portfolios, sometimes via hedging strategies.
In conclusion, Jensch's approach encourages investors to build well-rounded, globally diversified equity portfolios that balance growth potential with risk management amid evolving market dynamics. A globally diversified portfolio is a good response to crises, offering less volatility and high returns.
Finance and business are integral parts of Jensch's approach, as he advocates for globally diversified equity portfolios in investing. He recommends a focus on quality companies with strong balance sheets and solid earnings growth prospects, and he suggests incorporating defensive sectors to help mitigate volatility.
