Market volatility is an inevitable part of investing, but it doesn’t have to be a cause for panic. While short-term swings can be unsettling, a disciplined approach can help you navigate uncertain times and even create opportunities. Here are ten key strategies for managing your portfolio when markets are volatile.  

As always, it is important to do your own research before making decisions to invest. Past performance is not an indicator of future performance. 

1. Maintain a long-term perspective 

Volatility is often short-term, but successful investing is all about the long game. Avoid making impulsive decisions based on daily price fluctuations. Instead, focus on the fundamentals of your investments and the broader economic picture. A well-structured portfolio designed to meet your long-term goals will generally withstand short-term market swings. Past performance is not an indicator of future performance. 

2. Diversify your portfolio 

Diversification helps spread risk across different asset classes, sectors, and geographies. If one part of your portfolio suffers due to market conditions, other investments may offset losses. Consider balancing your exposure between: 

• Equities (domestic and international and global ETFs) 

• Fixed income (bonds, fixed income ETFs) 

• Alternative assets (real estate, commodities, infrastructure) 

A diversified portfolio reduces reliance on any single asset, making it more resilient in volatile times. Past performance is not an indicator of future performance. 

3. Reassess your risk tolerance 

Market swings can test your risk tolerance. If recent volatility has made you anxious, it might be a sign that your portfolio isn’t aligned with your true comfort level.  

Revisit your asset allocation and adjust if needed, so that it matches both your financial goals and your ability to withstand fluctuations. 

4. Avoid emotional decision-making 

Fear and greed are two emotions that often drive poor investment choices. During sharp declines, investors may panic and sell at the worst possible time, only to miss the subsequent rebound. On the other hand, euphoric (extremely bullish) markets can lead to excessive risk-taking. Develop an investment plan and stick to it, making decisions based on data rather than emotions. 

5. Keep cash reserves for opportunities 

Periods of volatility can present buying opportunities, particularly when quality stocks are trading at discounted prices. Having a cash buffer allows you to take advantage of these moments without selling existing holdings at a loss. This strategy works best if you have a watchlist of strong companies that you’d like to own at the right price. Past performance is not an indicator of future performance. 

6. Use Dollar-Cost Averaging (DCA) 

Instead of trying to time the market, consider a dollar-cost averaging strategy – investing a fixed amount at regular intervals. This reduces the impact of short-term price swings and helps you build your portfolio systematically. Over time, you’ll buy more shares when prices are low and fewer when prices are high, smoothing out market fluctuations. 

7. Focus on quality investments 

During volatile periods, lower-quality stocks often suffer the most. Prioritise companies with strong balance sheets, consistent earnings and competitive advantages. These businesses tend to be more resilient in downturns and recover faster when markets eventually stabilise. Past performance is not an indicator of future performance. 

8. Rebalance your portfolio periodically 

Market movements can shift your asset allocation over time. If equities have outperformed, they may represent a larger portion of your portfolio than intended, increasing your overall risk. Rebalancing ensures that your portfolio stays aligned with your strategy by trimming overperforming assets and adding to underweight areas. 

9. Stay informed but avoid overreacting to the news 

Financial news can be overwhelming, especially during times of heightened volatility. While staying informed is important, excessive media consumption can lead to reactionary decisions. Focus on the bigger picture rather than reacting to every market-moving headline. 

10. Consider defensive stocks and sectors 

If you anticipate prolonged volatility, consider shifting part of your portfolio into defensive sectors that tend to be more stable, such as: 

• Consumer staples (food, beverages, household goods) 

• Healthcare (pharmaceuticals, medical services) 

• Utilities (electricity, water, gas) 

These industries sometimes can be less volatile regardless of economic conditions. Past performance is not an indicator of future performance and it is important to undertake your own research and consider your own circumstances.

Market volatility can be unsettling, but it’s a natural part of investing. By staying disciplined, diversifying, and focusing on long-term fundamentals, you can manage risk effectively and even uncover opportunities. Instead of reacting to short-term movements, maintain a well-thought-out strategy that aligns with your financial objectives.