EXPRESSING SHORT-TERM MARKET VIEWS

THE CHALLENGE

How can I manage my portfolio to express short-term market views?

Recent market volatility has prompted portfolio managers to want to express a more differentiated view across potential countries, sectors and factors.

Making tactical portfolio overlays can potentially help to harness short-term gains as well as provide added protection in different market environments.

THE ACTION

BlackRock can partner with clients to perform stress-testing analysis and assess how the portfolio might perform under different scenarios.

We showcased that, through the use of a tactical overlay using ETFs, the client was able to construct a portfolio that was protected in the instance of a market volatility increase, but remained invested to harness gains in the event of an emerging markets rally.

Hypothetical stress test analysis

Source: BlackRock, as at May 2020.
For illustrative purpose only. Equity Volatility Increase represented by a move in the VIX index by 16.5%. EM Rebound based on MSCI Emerging Markets Index up 10%.

Case studies are for illustrative purposes only; they are not meant as a guarantee of any future results or experience, and should not be interpreted as advice or a recommendation.

Index returns are for illustrative purposes only. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged, and one cannot invest directly in an index.

THE OUTCOME

The client re-evaluated the instruments that they were using to capture different sources of return. The incorporation of ETFs in their portfolio construction process enabled them to become more nimble with their tactical asset allocation views.

WHY INDEXING?

The liquidity of the ETF market, helping to minimise costs of accessing these exposures, led the client to increasingly utilise these tools to dynamically tilt the portfolio in accordance with market events.

WAYS WE CAN HELP YOU

From case studies to full outsourcing, explore how our portfolio solutions can help you rethink your portfolio.

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