If you’ve been following the financial headlines and markets, you probably have noticed that the global stock markets and commodities like oil are off to a shaky start in 2016. Some of the reasons for this seem to be a slowing Chinese economy, a strong US dollar, the anticipation of further Federal Reserve interest rate increases this year, and economic data releases that have failed to match expectations. With all of the pessimism currently circulating in the financial press, you may be wondering how your portfolio has been holding up.
We have some good news that underscores much of what we’ve been saying for some time: Diversification matters.
Since the beginning of the year as of January 15, 2016, the average Kahler Financial Group 70/30 portfolio is down about -3.70%, while a comparable portfolio without High Yield Bonds, Absolute Return and Managed Futures strategies is down -5.32%. The more diversified KFG portfolio is outperforming the less diversified portfolio by close to 50%.
Taking this a step further, global stocks are down about -9.34%. The more diversified KFG portfolio is outperforming global stocks by nearly three times!
We are optimistic that the benefits from diversification through the use of Managed Futures and Absolute Return investment strategies will continue to add downside protection to your portfolios, especially if the volatility in traditional markets such as stocks persists.