3 Key Principles for Your Investment Strategy 2024

3 Key Principles for Your Investment Strategy 2024

In the world of finance, many of us harbor the thought of investing but often find ourselves at a loss for where to start. Why does the stock market keep soaring, yet your global equity fund investment strategy seems to be marking time? Is now a good moment to enter the market? Can a global equity fund investment strategy help you cope with market volatility, and what to do when the stock market dips too much? Allow me today to share the insights of a seasoned professional from the financial world, Deputy General Manager Zhuang of BlackRock Investment Trust. He has dissected how to select investment opportunities and revealed strategies for global equity funds to outperform the market.

Global Equity Fund Investment Strategy and Market Conditions

Entering the post-rise era, looking back at last year, the global markets were particularly unstable with major indices undergoing adjustments. However, this year’s first half has seen both Taiwan and US stocks achieving double-digit returns. Should investors seize this opportunity to enter the market or should they, cautious of “buying high,” hold back?

According to Deputy General Manager Zhuang, two factors are crucial to monitor, as they will directly impact the performance and returns of global equity fund investment strategies. First off, interest rates are a key consideration for investors. Last year saw a rapid increase in rates, whereas this year, rates have been relatively stable. BlackRock predicts that by year-end, interest rates will remain stable and could even enter a cycle of cuts by the next year. Compared to last year’s sharp increase, this suggests a significant change in the environment facing global equity fund investment strategies.

Key Factors Analysis

The second critical factor is the economic condition. Last year, there were widespread concerns about an economic recession, but as of now, from the first half of the year, the US has maintained a growth rate of about 2%. For the second half, we anticipate that the growth rate will remain roughly the same, hence the possibility of avoiding a recession still stands. Combining these two points indicates an optimistic expectation of investment returns for global equity fund investment strategies, providing investors the opportunity to reap substantial rewards in such an environment.

For future global equity fund investment strategies and directions, Deputy General Manager Zhuang believes that national economies face a relatively calm soft landing scenario. Coupled with this year’s elections, the market still has its support points, meaning there are ongoing opportunities for investment entry. Many investors have shown interest in both equity funds and bond funds. But how to discern their respective advantages?

Investment Strategy Overview

His advice is not to simply choose between equity and bond funds but to delve into the different types found within these two categories and unearth their investment potential. For example, short-term government bonds currently offer attractive yields. If you observe that the risk-free rate in the US – i.e., government bond yields – has risen above 5%, then short-term bond funds are certainly worth attention.

Discussing stocks, this year we favor several market trends, such as artificial intelligence (AI), business opportunities brought by the global supply chain restructuring, low-carbon transformation, population aging, and changes in the financial industry within a high-interest-rate environment. These are industry trends within equity funds that deserve investors’ attention. However, for many investors, this information may seem complex. For those who wish to simplify their global equity fund investment strategy, I recommend dividend investing-focused global equity funds, as they allow investment in premium global stocks without the need to delve into the complexities of each industry and individual stock.

Deputy General Manager Zhuang also highlighted that different investment groups might be suited to different kinds of funds. For novice investors, global equity funds are a classic entry-level choice, suitable for a higher investment ratio. For retirees, considering their funds may be fixed and not increase, the robustness and continuity of investment strategies are more critical. Therefore, it is recommended to allocate a certain proportion of global equity fund investment strategies in their investment portfolios. We also believe that for retirees, the portion of their investment in equity funds can consist of over half in global equity funds.

Revenue and Risk Management

When discussing investment strategies and fund selections, we cannot overlook the topic of dividends. Many Taiwanese investors pursue passive income and have a strong interest in high-yield products. But how should one examine their current global equity fund investment strategy allocation? Deputy General Manager Zhuang suggests that investors should pay attention to the “dividend composition statement,” which is a requirement by financial regulatory authorities that mandates transparency in the sources of dividends.

The fund’s dividend sources have two components. One part is distributable net profits, including interest from bond investments and dividends from equity funds. The second part is the investors’ own principal and unrealized capital gains on the account. While dividends can come from principal, if the majority of dividends stem from distributable net profits, it may be more robust and reliable. Therefore, when selecting funds, in addition to considering the dividend rate, investors should also examine the fund’s own investment return rate, the market’s yield levels, and related spreads.

Careful Selection of Fund Products

For specific fund selections, Deputy General Manager Zhuang provided concrete examples: BlackRock Investment Trust offers a Global Intelligence Data Equity Income Fund suitable for investors looking to invest in businesses with high-dividend growth worldwide. This fund combines yield, low volatility, and smart stock selection strategies for investment.

Finally, he also emphasized the importance of setting a reasonable stop-loss strategy when adopting a global equity fund investment strategy. Especially for global equity funds, given the continuous expansion of global markets and the long-term trend of economic growth still being favorable, entering the market during downturns may be a good buying opportunity rather than hastily setting up stop-loss orders. Statistics show that after most major market downturns, if investors choose to enter the market, in the majority of cases, they could see satisfactory performance in the following year.

In summary, a global equity fund investment strategy is not a simple task; it requires a balanced consideration of various factors. Only by thoroughly analyzing market dynamics, interest rate trends, economic forecasts, and fund performances can investors make wise investment decisions. I hope these shares help everyone in the financial domain to soar high and seize more potential investment opportunities.