Seven Principles of Portfolio Resilience

To remedy the situation, they made a bid to acquire Unilever, which failed. That turned investor attention to their growth-through-acquisition strategy rather than organic brand development and innovation. As a result, the past 15 years have seen remarkable returns in equity markets, undermining the perceived need for resilience. In fact, many of today’s market participants have not faced a significant downturn that would have taught them how to identify when capital might be misallocated. We believe this illusion of market stability has led investors to overlook the importance of resilience and for many to assume that policymakers will continue to bail them out, which encourages the continuous pursuit of aggressive risk taking.

Income Diversification with Australian Tax Advantages

Below we lay out seven key principles towards building resilient portfolios. In the long run, a climate-resilient entrepreneurial ecosystem will emerge through collaboration and shared leadership, and through demonstrations of how the private sector can bring new solutions to the climate challenges we face. The OECD’s Development Assistance Committee argues that driving lasting positive environmental change requires private sector engagement that promotes sound business models for environmental protection.

Proving the case for natural capital investments

Well-designed government CCRI policies and competent training providers stimulate private investment in green skills, improving the capacity to innovate and provide new solutions for climate adaptation. The financial performance (the risk-return profile) of infrastructure investments is a critical determinant of private capital investment in infrastructure as an asset class. In the case of infrastructure debt, the return on investment is both attractive and resilient. Glynis Miller, Trade Commissioner said, “Pacific Trade Invest NZ is committed to assisting, pacific island countries expand their export markets and benefiting from inbound investment.

The process identified that a nature-based solution would generate the best social, environmental and economic outcomes for the cost of the investment. “We provide forward-thinking solutions to help you grow and achieve your financial goals at every stage of life,” by ensuring your investment strategy complements your business success within Australia’s unique regulatory and tax framework. Your portfolio’s foundation should reflect your personal goals, time horizon, and risk tolerance while considering the unique characteristics of Australian markets.
But more time in the market means more exposure to an asset class (Australian and global equities) that historically outperforms other major asset classes over time [1]. We’ll help you plan so you can enjoy life with peace of mind,” by building a portfolio strategy that leverages Australia’s unique superannuation advantages and supports your transition to retirement. Proper liquidity management means never being forced to sell assets at inopportune times while remaining positioned to invest when others cannot. This information is general in nature and is provided by Partners Wealth Group.

• Some investors rarely consider what can go wrong with a stock upon buying it – only what can go right.
• Businesses can provide new technologies, such as innovative irrigation systems or low-energy lighting, and new services, such as sustainable water management.
• With just slightly higher risk, infrastructure debt provided more than three times the return provided by these government bonds.
• Private sector development can contribute to climate resilience by supporting systemic changes affecting businesses’ response to current and emerging threats.

These views are subject to change at any time and should not be construed as the Advisor’s investment advice, as securities recommendations, or as an indication of trading intent on behalf of MFS. The COVID-19 crisis exposed the vulnerabilities of margin enhancing, over-optimized just-intime supply chains that were finely tuned to specific components or suppliers. The automotive industry, known for its complex supply chains, suffered significantly during COVID when an inability to source simple components severely disrupted their production process. However, companies that incorporated redundancy and flexibility in their supply chains managed quicker recoveries, demonstrating the value of strategic foresight in resilience building.
A cost-benefit analysis has demonstrated that avoided costs exceeded reconstruction and betterments costs faster than expected. In today’s market environment, focusing on resilience and building wealth over time seems largely out of favor, yet it is one of our core investment objectives. Resilience becomes paramount when the true risks and misallocations hidden by prolonged market booms eventually emerge. Often, it is not a crisis that destroys capital, but malinvestment leading up to that crisis. In the current market environment, we believe that there is an underappreciated — yet crucial — ingredient for delivering on investors’ long-term objectives. Something that helps manage risk and drive returns through the economic cycle.
During the pre-mortem process, the investor knows how to react if that downgrade occurs. To support organisations navigating the different tools and methodologies available, members of the Resilient Futures Investment Roundtable explored examples of resilience valuation in practice. These case studies shed light on the suitability of existing tools and resources in different decision-making contexts. Constructing an investment portfolio requires careful planning and thoughtful consideration to define an investment mandate while building and managing the investment portfolio is an ongoing process. However, building your wealth requires thoughtful consideration beyond just investing. The views expressed herein are those of the MFS Strategy and Insights Group within the MFS distribution unit and may differ from those of MFS portfolio managers and research analysts.
To enable this, members are exploring resilience valuation approaches that recognise the systemic and cascading nature of climate and disaster risk, and consider the broad economic, social and environmental costs and benefits of resilience building projects. Infrastructure assets play vital roles in connecting people and goods, supporting health care and powering cities and regions. We know their resilience is more than just a good investment decision, it’s a societal need.
By becoming more climate resilient, we can better assess how climate change will create new or alter current climate-related risks and take steps to better cope with these risks. Data on recovery rates also point to the attractiveness of infrastructure debt investments. Recovery rates following defaults are very high for infrastructure debt in high-income countries (81.6%) and middle- and low-income countries (84.3%) compared to recovery rates for corporate debt (50-60%). “Unfortunately, our internal analysis and company engagements often find that companies are not adequately understanding and disclosing their physical risks or taking adequate actions on physical risk mitigation and resilience planning. On a more positive note, Australia and New Zealand are well-placed to provide international leadership on building resilience.
A well-diversified portfolio ensures that losses in one area are often offset by gains in another, leading to a more stable investment experience. This can help investors stay disciplined and maintain a more consistent long-term approach in times of volatility, helping them avoid the pitfalls of panic selling or taking too much risk and then not being able to survive through tough periods. We believe that understanding and integrating resilience into investment strategies is not just prudent, it is critical for navigating the complexities of the current market landscape.
Users and decision makers can therefore ‘enter and leave’ the Framework at any point (phase, module, or component) and need not run through every phase, module or component, or do these sequentially. The Resilient Futures Investment Roundtable (previously Resilience Valuation Initiative) is addressing this gap by collaboratively creating resources developed from practical experience to improve decisions around when, where and how to invest in resilience. As the impacts and the costs of disasters continue to rise, investing early in resilience reduces the impacts of a disaster and the costs of recovery.