Experts in the investment community, including Sigma Pensions have called on investors to hedge against their risks as market volatilities occasioned by Covid-19 takes toll on businesses.
They are however telling investors not to panic, that despite the volatility and rising risks, there are also hidden opportunities.
Pabina Yinkere, chief investment officer, Sigma Pensions his advice while speaking at a webinar titled, “Big Future, Little Steps – The Power of Diversification,” organized by the Pension Fund Administrator in Lagos.
According to Sigma Pensions, the webinar was organized with the aim of educating participants on skills/actionable plans that could guide diversification, choosing investment instruments and pension fund management.
In his presentation titled, “Hedging Pension Funds Against Market Volatility,” Yinkere, noted that 2020 was a peculiar year, especially for investors, as the financial markets were impacted by the Covid-19 crisis.
He said: “When you are faced with a volatile market, do not panic; read the situation well, understand what is going on and where necessary, reduce risks.”
He also advised investors dealing with market volatility to: “Cushion portfolios with assets that give accrual income and look for opportunities in the chaos,” adding that: “There is gold in dirt.”
Yinkere, who pointed out that volatile assets are usually considered riskier than less volatile assets because their prices are expected to be less predictable, encouraged investors to pay close attention to the management of their pensions?
In her contribution, the VP, Global Markets at Parthian Partners, Ola Oladele, stressed the importance of investing, noting that while all investments provide rewards in one form or the other: “For each type of investment, there are always risks.”
She cited inflation which, according to her, has greater risks for debt than for investments in equities.
The financial expert advised investors to always ensure that their portfolios are sufficiently diversified in order to minimize the risks of unexpected losses.
“Diversification is simply not putting all your eggs in one basket. You diversify to minimize the risk of loss to your overall portfolio,” she stated.
She also pointed out that diversification of their portfolios would expose investors to:” more opportunities for returns; safeguard against market cycles and reduce volatility and heart problems.”
Similarly, in his presentation, the CEO and Co-founder of Cowrywise, Razaq Ahmed, stressed the importance of financial education for investors. According to him, of all the requirements that make for successful investment, financial education is probably the most important.
He said: “The fact that you are taking risks is not enough; it will depend on the nature of the asset class. You still need to have a basic knowledge of the asset class.”
