SCB WEALTH has analyzed lessons from the past year and identified three key issues hindering investors from maximizing returns: 1) Timing investments accurately is essential; refrain from constant speculation; 2) Optimal investing involves diversification; and 3) Persistence in staying invested is crucial. Investors are urged to split their investments into a Core Portfolio for medium- to long-term holdings, and an Opportunistic Portfolio for profit-seeking opportunities. Confidence in asset allocation allows investors to navigate market fluctuations and potentially achieve satisfactory returns.
Mr. Roongroj Seksunwiriya, Senior Vice
President of the SVP, Investment Product Selection & Partnership at Siam
Commercial Bank provided valuable insights demonstrating that the 2023 SCB
WEALTH investment analysis revealed three crucial lessons applicable to 2024 to
ensure portfolio stability and the ability to generate robust returns amid
market volatility. These include: 1) Precision in timing investments is essential;
avoid constant speculation: Analyzing the S&P500 index in relation to
daily trading values revealed that on days with significant stock increases,
trading volumes were higher, indicating heightened speculative activity.
Choosing to invest during market upswings may expose portfolios to increased
volatility. Therefore, strategic investment during market downturns presents a
greater opportunity for generating substantial returns.
2) Diversification is integral to optimal
investing: Reflecting on the early part of 2023, the market
anticipated economic and investment trends, with expectations of a sharp
increase in interest rates by the US Federal Reserve, which would potentially
impact various companies' operating costs. While this initially raised
concerns, by the end of 2023 surprising outcomes emerged. The S&P 500 Index
increased by 24.7%, the Nasdaq Index surged by 44.5%, and the Dow Jones
Industrial Index (DJI) rose by 13.70%. Interestingly, the Chinese stock market
benefited from the country's reopening, leading to a recovery in the
consumption sector, yet the CSI 300 index saw a return of -11.7%. In Thailand,
positive expectations from the reopening of China and a flourishing tourism
sector did not translate into stock market gains, as the Thai stock index
recorded a -15.6 % decline. Contrary to expectations of downward pressure due
to high-interest rates, gold prices increased by 12% at the close of the year.
Despite these unexpected outcomes, investors are advised to adhere to a key
principle: diversify risks by incorporating a variety of assets into the Core
Portfolio to ensure the potential for satisfactory returns, regardless of
market fluctuations.
3) Persistence in staying invested is
crucial: If, over the past year, investors continue to believe in
the potential and strength of the US economy, maintaining investments in the US
stock market without significant adjustments or portfolio reductions is likely
to yield favorable returns. Nevertheless, 2023 statistics indicate an increase
in investments in money market funds, suggesting that many investors tend to
adjust their portfolios or reallocate investment proportions during periods of
stock market volatility, deviating from the strategy of staying invested. There
is an anticipation that if central bank interest rates decrease, investors
might progressively shift towards investments in the US, Japanese, and European
stock markets.
Following the lessons learned in 2023, SCB
WEALTH advocates a refined approach to portfolio management in 2024, proposing
a two-part investment strategy:
1) Core Investment Portfolio: This involves
constructing a core investment portfolio that diversifies risk across various
assets, encompassing fixed income, stocks, and alternative assets. Setting
medium to long-term investment goals (approximately 3-5 years) and minimizing
excessive buying and selling are key principles. Recommended assets include the
SCBGA fund, where the fund manager adjusts the investment weight across various
assets, and the SCBDBOND(A) fund for debt instruments, with the fund manager adapting
proportions based on market conditions. For ultra-high-net-worth clients,
allocating a portion of the Core Portfolio to alternative assets like BCRED-O
outside the market is advised.
2) Opportunistic Portfolio: This
involves allocating some investments based on the insights of various
investment advisors. Investors can choose funds with higher risk than core
funds, aiming for short-term returns. In case of unexpected outcomes, the
limited investment proportion in this section will not significantly impact
long-term investment expectations in core assets. SCB WEALTH recommends the
KT-INDIA fund in this segment, known for consistent performance and a strategy
of investing in large stocks in the Indian stock market. Additionally,
investments in structured products and Dual Currency Note Pricing (DCI) are
suggested, providing returns influenced by desired exchange rates. For details
on other intriguing assets, investors are encouraged to consult the bank's
relationship managers before making investment decisions.
Cautionary Note:
·
Investing
carries risks. Investors are advised to thoroughly understand product
characteristics, conditions, returns, and associated risks before making
investment decisions.
·
Past
performance does not guarantee future results.
·
As
the funds do not hedge the entire amount against exchange rate risk, investors
may experience gains or losses due to fluctuations in the exchange rate,
potentially receiving a refund lower than the initial investment.
·
Investing
in high-risk or highly complex products differs from investing in general
investment products. It is advisable for investors to seek additional advice
from financial professionals before making such investments.
·
Further
information about master funds and mutual fund prospectuses can be found on the
websites of SCB Asset Management Co., Ltd. and Krung Thai Asset Management PCL.
·
For
further details, please contact the SCB Call Center at 02-777-7777.
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