Amid increasing fears that Nigeria may face higher inflationary pressure following the federal government’s retention of subsidy on petroleum products, the Managing Director, Futureview Asset Management, Ughochi Nnodi has offered investment tips for building an efficient portfolio.
Nnodi explained that investors could optimize the tough operating environment by investing in assets that hedge against inflation. According to her, there are resilient sectors that outperform inflation and generate alpha returns. She noted that investors should take advantage of sectors such as commodities, financials, healthcare, consumer staples, energy, technology and real estate to build a balanced portfolio.
After- eight months of steady deceleration in headline inflation, there was a marginal spike in the December 2021 rate from 15.4percent in November 2021 to 15.63percent in December 2021. The current increase in headline inflation which is attributed to currency depreciation and the liquidity challenges in the forex market no doubt impacts negatively on all investment outlets.
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“There are resilient stocks that thrive during inflation because of their underlying assets. Investors should build their portfolios with stocks of companies in the healthcare, energy, commodities, consumer staples, financials and real estate among others as a risk and reward trade-off. We should not lose sight of mutual funds which is a collection of investments in different asset classes.
“At Futureview, we design financial products to meet the demand of our array of customers with diverse investment objectives and risk tolerance. For instance, we have a product that targets Nigerians in diaspora. It is called Futureview Dollar Fund. We floated it along with Futureview Equity Fund. The two financial instruments hedge investment against inflation while they provide regular income.
“ It is settled in portfolio management that during high inflation rate, mutual funds provide an opportunities for diversification at every dollar level, sharing of investment expenses, economies of scale and operational efficiencies, ease of investing in specialized market sectors and investment tracking, simple portfolio management, access to professional money managers and low trading costs,” said Nnodi.
