Aviva Investors Multi-Strategy portfolios
The result of the US presidential election underlines the importance of investing in a highly-diversified portfolio that is able to navigate volatile market conditions.
This is the philosophy upon which the Aviva Investors Multi-Strategy is built. During times of suspected volatility, we expect the balanced and diversified nature of the portfolios to help weather any heightened short-term volatility.
Prior to the US presidential election, and in line with the consensus view, we anticipated a victory for Hillary Clinton. However, we also believed that certain areas of the market had potentially overestimated the likelihood of a Clinton presidency. Against this backdrop, we decided to balance the portfolio for either outcome and made some consequent adjustments.
For example, we exited our long Mexican peso against the Canadian dollar position prior to the US election as we believed we were not being compensated adequately for the risk undertaken. Furthermore, we reduced some of the volatility associated with our equity positions; buying put options on South Korea’s KOSPI index. This reflected our view that South Korea, as well as Mexico, could be a driver of financial market volatility in the event of a Trump win.
In addition, we have positions that reflect our long-held view that global reflation is underway. We have been expecting a rise in inflation, while anticipating that a Trump triumph might encourage investors in general to raise inflation forecasts. This strategy is expressed via curve steepening positions in the US, Australia and South Korea, as well as inflation positions in the US and Europe.
In line with our philosophy, we will continue to focus on our three-year investment horizon, and seek to benefit from any opportunities that may arise as a result of short-term volatility.