Investors must ‘cut through the noise’ and focus on establishing a long-term strategy that aligns with their investment goals
Short-termism has become a dominant feature of the investment landscape. Amid market volatility, geopolitical tensions and an overwhelming flow of news, staying focused on the bigger picture has become more challenging. The constant bombardment of news and market predictions creates a lot of ‘noise’ and can pull investors to different directions. As Michaella Savva, the Manager of Wealth & Investment Services at Hellenic Bank noted investors must “cut through the noise” and focus on establishing a long-term strategy that aligns with their investment goals, regardless of the twists and turns in the market. Rather than reacting to market fluctuations, investors should focus on key themes shaping the current landscape.
The New Macro Landscape
The current macroeconomic environment represents a fundamental shift from the past. Geopolitical fragmentation has disrupted global supply chains, driving volatility. We are moving beyond peak globalisation, at least for now, and we see countries prioritizing national security. There is power and economic competition. This shift is reshaping global trade. As a result of the US-China tensions, opportunities were created for countries like Mexico and India, as US businesses have been looking to diversify operations away from China.
Aging populations in developed markets are presenting challenges to productivity and economic growth. Europe, with its oldest demographic profile, faces increasing strain on healthcare, pensions, and economic growth. In contrast, emerging economies such as India benefit from a growing young workforce. For developed markets, technological innovation and enhanced productivity will be crucial in order to adapt to these demographic shifts.
Additionally, inflationary pressures persist despite significant progress made. While the ECB, the Fed, BoE are on their rate cut journey, geopolitical tensions, near-shoring, demographic shifts, these will likely continue to put upward pressure on inflation.
It’s no surprise that in the new macro environment, we have been experiencing high levels of macro and market volatility. And we don’t see that going away yet. We saw Donald Trump’s win fuelling a market frenzy, the so called “Trump trades”. Taking Tesla as an example, its market value jumped to $1 trillion, influenced by Elon Musk’s support for Trump. This illustrates how markets can react to headlines and potential policy shifts. But making investment decisions solely on the latest news and political development reflects a short-term approach. Instead, a long-term perspective is required.
Opportunities in Unstoppable Megatrends
“At Hellenic Bank Wealth, we favour quality investments across assets and structural megatrends that are here to stay, and are reshaping societies and creating investment opportunities,” says Ms Savva.
1. Transition to a Net-Zero Economy
Global investments in solar panels, wind turbines, electric vehicles, and waste management are driving the shift to a greener future. Companies adapting to this transition including, energy companies that are evolving their business models, are poised for growth.
2. Urbanisation
In search for better education, jobs and opportunities, people have been migrating to cities. The UN estimates that by 2050, two-thirds of the global population will live in urban areas. This trend creates significant demand for infrastructure, including transportation, housing, and communication networks.
3. Changing Demographics
In a world of increasing longevity, retirement planning and healthcare demand are growing. Firms that address age-related diseases and companies with products and services for senior populations are well-positioned to benefit. Ms Savva stressed that pension funds need to start preparing for the demographic changes to guarantee their long-term financial sustainability and avoid burdening the future generations. At an individual level, retirement planning should start as early as possible.
4. Digitisation and AI
The digital revolution is accelerating, with AI leading the charge. While the initial beneficiaries have been tech giants and semiconductor firms, AI’s transformative impact is broadening to other sectors as focus is shifting on the infrastructure of AI. Utilities, for example, are quiet tech beneficiaries, and there is a massive increase in how much power we need. There is also strong demand for datacenters but not enough supply; mega-cap tech companies have been making massive investments in the AI space, including datacentres. Over time, as more companies incorporate AI in their operations, we will be able to assess its impact on productivity and profitability across different sectors.
“These megatrends are interconnected, unstoppable, and will impact investment portfolios whether we choose to engage with them or not,” adds Ms Savva. Hellenic Bank Wealth partners with global fund managers to provide their clients targeted exposure to these transformative megatrends.
Building Resilience Through Diversification
Diversification is key to building resilience and enhancing risk-adjusted returns. Overallocation in one asset class, one sector, one geography creates concentration risk. As Ms Savva points out, “the companies and sectors driving market performance today may not be the ones leading the markets tomorrow.” Hellenic Bank Wealth encourages diversification across assets, sectors and regions. Including assets with varying return expectations and correlations helps create robust portfolios capable to withstand different market conditions.
Adopting a goal-based investment approach is a cornerstone of Hellenic Bank Wealth’s philosophy. Clear, well-defined goals provide a roadmap for constructing portfolios, helping investors strike the right balance between risk, return, and time horizon. “We help clients develop dynamic investment strategies that aligns with their short- and long-term objectives while also maintaining the flexibility to make tactical adjustments and seize emerging opportunities,” Ms Savva explains.
Investing with Discipline
At Hellenic Bank Wealth, our mission goes beyond developing and executing investment strategies. We build long-lasting partnerships with our clients, empowering both institutional and individual investors to navigate the complexities of today’s market and macro landscape.
Ms Savva concludes that investing isn’t about timing the market and it isn’t a one-time thing; it’s a journey that requires consistency, discipline, monitoring, and adaptability. A disciplined, forward-looking investment strategy equips investors to navigate the challenges and seize the opportunities that will shape the future.