Market volatility should not prevent investment growth, according to Aberdeen Asset Management (Aberdeen).
While recent unstable market conditions have seen many investors holding cash assets, Aberdeen have said that avoiding riskier markets entirely could lead to some missed opportunities.
“You need volatility if you want to exploit markets, so some volatility is good,” Aberdeen managing director Brett Jollie told InvestorDaily.
“However, what volatility can do is destroy confidence. That is going to have a negative impact on investors’ decisions and negative impacts for their own wealth.”
Mr Jollie said that even in very volatile markets, opportunities exist for strong returns for investors with long-term strategies.
“There certainly are markets out there where there are opportunities, particularly for active managers who do the research, and investors can find value in many places,” Mr Jollie said.
“There are companies on the ground in very volatile markets that are doing very well after a number of years of deleveraging. They have very strong balance sheets and business models that continue to profit, and if investors do their research, it is just a case of uncovering them.”
The end of 2012 saw a return to equities for many investors in the domestic market on the back of a cut in interest rates.
Aberdeen has said this rebalancing towards growth assets is important for the market, but warns investors to retain caution.
“Investors have been quite naturally wary of growth markets but at some point in time, markets will recover,” Mr Jollie said.
“It’s difficult to see too many investors confidently dipping their toes back into markets in the near future.”
