Building resilient portfolios for uncertain times
WisdomTree Defensive Assets Framework
Every time equity markets go through a period of turbulence, with higher drawdowns and higher volatility, investors’ interest for defensive assets or defensive investing spikes. However, at that point in time, it is already too late. Money has been lost and it will take even larger gains to recover that money starting from a reduced capital base.
Timing the markets is incredibly difficult. Market crashes can be triggered by an infinite number of economic or geopolitical events that cannot be anticipated. Relying on switching between low beta assets and high beta assets at the exact right time is therefore a very risky strategy.
To protect their investments and build their wealth from a cycle to the next, investors should build all-weather, versatile portfolios that can resist unexpected events, reduce drawdowns and participate on the upside.
At WisdomTree, we use our Defensive Asset Framework to test and compare assets for that exact purpose; focusing on Risk Reduction, Asymmetry of Returns, Diversification and Valuation.
Offence wins games but defence wins championships
Balancing protection and upside potential is a difficult exercise. To help investors find some ideas and inspiration on how to tackle this challenge, we produced a series of blogs to assess which investments and which allocation techniques fare best in changing market conditions.
Defensive assets series
See our range of products highlighted in the defensive assets series:
This strategy provides access to high quality companies in terms of returns on equity, returns on assets and expected earnings growth, which are likely to grow their dividends whilst maintaining their quality aspects.