This downside management toolkit keeps you informed of the latest market events, shares how we have been managing downside risk in our portfolios, and equips you with important truths to hold on to when markets bounce through turbulent times.
Insights for times of market uncertainty
Market views - Markets spooked by a flattening U.S. Treasury yield curve?
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How we manage risk
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What is risk management?
When it comes to investing, risk management is the active mitigation of uncertainty that surrounds all investment opportunities. Investing is inherently risky. At Russell Investments, we do not seek to avoid risk, but rather work to ensure that the right risks are taken, with the highest likelihood of compensation. We work to ensure exposure to uncompensated risk is minimized.
How Russell Investments manages downside risk
At Russell Investments, we help investors manage downside risk in three ways: by diversifying sources of returns, using a robust dynamic asset allocation process to guide tactical positioning, and seeking effective implementation capabilities. We have been anticipating a low-return, high-volatility environment for the last 2-3 years. Accordingly, we have been dynamically adjusting our portfolio positioning to manage downside risk.
The search for returns: the low-return imperative
We believe the search for returns is not going to get any easier against a backdrop of high U.S. equity prices, narrow credit spreads and low bond yields. When expected future market returns are likely to be lower than the required rate of return, we believe an investor cannot afford to ignore any investment strategy that may offer incremental return, take on risks they do not expect to get paid for or disregard implementation efficiency.
Why downside protection may matter more than upside growth
The global macroeconomics and geopolitical outlook remains uncertain, suggesting that an environment of low rate, low growth, and high valuations may linger. Against this backdrop, preserving capital may be more important than seeking the growth of capital, because, in the investing world, losing less means requiring less to bounce back.
How we position our portfolios to help against downside risk
Complacency has no place in portfolio management. Once a portfolio or fund is built, it needs to be dynamically managed to not only take advantage of potential upside opportunities, but avoid as much downside as possible. At Russell Investments, our global portfolio managers direct multi-asset portfolios in real-time, all the time.
Multi-asset investing: the importance of seeking to manage the downside
Big losses are hard to recover from. That’s why a multi-asset approach that also emphasizes managing downside risk – the range of techniques designed to reduce the probability and magnitude of losses in a portfolio – is so valuable.
Important market volatility truths
Market Cycle of Emotions
When things are great, we feel that nothing can stop us. And when things go bad, we look to take drastic action. Because emotions can be such a threat to an investor's financial health, it is important to be aware of them. This awareness can then protect you from the negative consequences of impulsive and irrational reactions to these emotions.
The impact of staying invested during market turmoil
Staying the course during market volatility is often difficult for many investors. Some choose to move to cash investments, while others try to time the market. Unfortunately, these investors are often buying high and selling low—and miss the rallies that follow the challenging periods.
Six Good Reasons to stay invested
Financial markets often go through phases of relative calm followed by abrupt and often unanticipated spikes in volatility. Historically, this volatility was most obvious in the equity markets. However, as bond yields hover near all-time low levels in Canada, the U.S. and across Europe, bond market volatility is an additional source of market anxiety for investors
Market timing amid volatility - tricky as ever
Correctly timing when to get out of – and back into – the market is tricky. Get out right after a ‘worst’ day, and one might not get back in soon enough to catch a ‘best’ day. Such mistiming can have a significant impact on potential portfolio returns.
2019 Global Market Outlook
Russell Investments’ comprehensive quarterly report setting out our strategists’ views and analysis on global investment markets and economies.