Investors should prefer a balanced portfolio than sitting out of the sideways market

By Siddesh Suresh Mayenkar, 1 February 2015

Dubai: In volatile times, investors should not shy away from the markets, but work with threshold to eke out gains and scale down their expectations at the same time, forgetting the stellar 40 per cent returns witnessed in 2014.
The Dubai index which gained more than 40 per cent until November, gave up all its gains at one point only to end the year 11 per cent higher. The index registered a peak of 5193.03 on September 4.

On Thursday, the Dubai Financial Market Index shed more than 1.5 per cent to end at 3,674.40.

“It’s important to have a balanced view and not to put all money into equities. If the money is well allocated between the asset classes, then the risk is balanced out. Sitting out of the market is not really an option,” Muhammad Shabbir, head of equity funds and portfolio management at Rasmala Investment Bank told Gulf News.

Rasmala runs a Mena domiciled funds and has an asset under management of $1.2 billion.
“Investors should work with expectations and in this market, they should scale down their expectations. There is no dearth of 6-7 per cent opportunities, so you need not buy petrochemicals or any volatile stocks,” said Shabbir.
Rasmala sees a limited downside in crude oil, which stayed near its lowest level in six years on Thursday. “There are no opportunities in fixed income market where you can make 4-5 per cent. Equity is the only class where if you take and manage your risk well, you can make profits. So you don’t aim for 40 per cent returns, right now we are in 7-9 per cent environment,” said Shabbir.