15th March 2022 - 2 min read
Robo-advisor StashAway has said that it will be re-optimising its clients’ portfolio once more in view of possible new sanctions that is brought on by ongoing geopolitical turmoil, specifically the Russia-Ukraine conflict.
“The Russian invasion of Ukraine has set geopolitics into disarray. While our portfolios have very limited exposure to Russia, they do have exposure to China. Currently, China is at risk of secondary sanctions due to its close relationship and continued dealings with Russia,” the robo-advisor explained in an email sent to clients, adding that the US could weaponise the delisting of Chinese ADRs (American Depositary Receipts) and use secondary sanctions to pressure China. This, in turn, has caused China assets to become significantly volatile over the past period.
As such, StashAway will be re-optimising clients’ portfolios to minimise direct and indirect allocations to Chinese assets and other affected emerging markets. “Depending on your chosen StashAway Risk Index (SRI), this re-optimisation will reduce your portfolios’ China exposure from 3% – 20% to 0% – 0.4%. For most portfolios, incremental allocation is going to Australian and Japanese equities, international treasure bonds, and international inflation-linked bonds,” it said.
Finally, StashAway urged investors to stick to their investment plans despite the market upheavals. “We know it’s easy to get caught up in the news about the current global situation. We’re keeping a close eye on event risks and global economic trends, so you can focus on your long-term goals,” it said.
This round of re-optimisation is the third to be carried out by StashAway in the past nine months. The previous two rounds of re-optimisation were performed to protect clients’ investments against rising inflation, following the economic effects of Covid-19 – first in the United States, and then globally. Meanwhile, there has been a total of six re-optimisation exercises since the robo-advisor’s launch in 2017, including this latest round.
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