Sovereign Finance lists strategies for sustainable investment
Sovereign Finance Company Limited (SFL) has emphasised the need for investors to stay informed and agile in order to successfully navigate uncertainties and optimize investment portfolios.
Mr. Olusola Dada, Managing Director, SFL, stated while speaking at a while webinar with the theme: “Sustainable Investment Strategies for Changing Times”, organised by the company
He delved into emerging trends in the investment landscape and the importance of adapting investment strategies to evolving market dynamics.
He argued that “spreading investments across various assets or asset classes is crucial to reduce risk.”
This approach, he noted, lessens the impact of a decline in any single investment, especially during uncertain times like economic downturns or market volatility.
He recommended four sustainable investment areas, namely: defensive sectors, diversified portfolios, real estate investment trusts (REITs) and emergency savings and liquid assets.
He said: “Investors should consider investing in defensive sectors that are less sensitive to economic downturns, such as healthcare, utilities, and consumer staples.
“These sectors tend to have more stable demand for their products and services regardless of economic conditions.
“In addition, investors should invest in diversified portfolio products that spread investments across multiple asset classes, thereby reducing risk by spreading exposure across different types of investments and market segments.
“In uncertain economic times, it’s equally essential to maintain an emergency fund consisting of liquid assets such as cash, savings accounts, and short-term deposits.
“Having readily accessible funds can provide a financial buffer in case of unexpected expenses, job loss, or economic downturns, helping to avoid the need to liquidate long-term investments at inopportune times.”
Dada further noted the diverse investment objectives of investors, ranging from capital preservation to retirement planning and socially responsible investing (SRI). He stressed the necessity for investors to clearly define their objectives, regularly review their financial goals, and adjust their investment strategies accordingly to align with evolving needs and circumstances.
On his part, Mr. Temidayo Osanyintade, General Manager/COO, LiquidCrest Microfinance Bank, explained that diversification is a proven investment strategy that involves spreading investments across different assets or asset classes to reduce risk.
In his words: “By diversifying your investments, you spread risk across various assets, reducing the impact of a decline in any single investment. During uncertain periods, such as economic downturns or market volatility, having a diversified portfolio can help cushion the impact of adverse events.
“As investors navigate the dynamic landscape of global financial markets, a nuanced understanding of prevailing trends and outlooks is essential to informed decision- making. The factors shaping the current global financial outlook directly influence investment strategies, risk assessments, and opportunities for wealth creation.”
