Plus 24 Ore - 31/07/2021 - "Investments with flows, what the market offers"

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Mediating risk

"The investor should not think in percentage terms," says Marco Galli, independent financial advisor, "but should quantify the desired coupon flow and consequently build the most efficient portfolio to achieve the goal, within a solid planning process, minimizing the risk of permanent capital loss. With current rates this is not possible, except for large assets, and one must accept to take on more risk. For example, diversify into ETFs of corporate bonds, high yield or emerging markets exposed to different risks (interest rate, issuer, currency). At this point, however, it becomes essential to carefully manage the risk/return profile of the portfolio."

The time factor

The choice of instruments also depends on the investor's time horizon: "For example," continues Galli, "a 10-year US government bond yields 1.2% (minus the cost of currency risk hedging); the issuer is safe, but there is the market factor and if you need to divest before maturity, perhaps after a year, the gain is not certain, because it will depend on the selling price of the securities."

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