Heightened volatility has defined markets for several years now. We might say it has become a 'new normal' – one that investors have had little choice but to grudgingly accept – since the ravages of the COVID-19 pandemic.
Yet the frequency of the ups and downs has reached another level altogether of late. The term 'rollercoaster ride' barely does justice to the rapid-fire succession of peaks and troughs which has unfolded during the past year or so.
The drama arguably began with last April’s Liberation Day announcement on US trade tariffs, which triggered big falls – followed, thankfully, by a reasonably swift recovery. Fluctuating expectations over AI-fuelled disruption then repeatedly sent company valuations seesawing – a phenomenon that continues today.
The geopolitical backdrop in the Middle East has been driving sentiment in near‑real time, with even overnight Truth Social posts acting as a leading indicator for moves across equity and commodity markets.
Naturally, we all recognise that major global and economic developments can weigh heavily on investor sentiment. They can trigger anxiety and, worse, prompt knee‑jerk decisions driven more by concern and confusion than by composure and clear understanding.
So how can an investment platform help against this backdrop? In our view, fundamentally, its role should be to deliver the sort of underlying infrastructure that encourages, supports and facilitates measured and effective responses to a challenging environment.
With this ideal in mind, let’s first briefly explore the issue of infrastructure itself. We can then take a closer look at some of the positives to which it should give rise – specifically, stability, transparency, flexibility and confidence.
Infrastructure
A major hurdle for many platforms is the weight of legacy infrastructure. After years of bolt‑ons, workarounds and acquisitions, they often end up with a patchwork of systems that are progressively less capable of performing as intended.
Stopgap solutions represent a popular 'fix'. Unfortunately, they assume technologies from an array of bygone ages can somehow happily coexist, which is seldom the case. At best, the number of clashes and conflicts is likely to be only temporarily reduced by such interventions.
Although the prospect might be painful for some platforms, the best way of maintaining pace with ever-advancing tech is to keep investing and adapting. In effect, it’s essential to concede the job is never done.
Acknowledging this truth is likely to prove both resource-intensive and expensive. It demands commitment, expertise and experience. As a result, partnering with specialist providers can be a major difference-maker in the endless quest for excellence.
Stability and transparency
Within a platform’s broader infrastructure, the processes surrounding investment must be particularly robust. Users require institutional-grade asset protection, strong regulatory oversight and operational resilience – both in the face of increased volatility and when conditions are more benign.
Novia Global aims to achieve this in a number of ways. These include our custody arrangement with Pershing, which is a subsidiary of the Bank of New York Mellon; the segregation of cash and investments; and strict compliance with our regulations.
In tandem, we strive for maximum transparency. It may be hard to believe, but there was a time when most investors were able to learn about their portfolios’ holdings and performance only at quarterly or even half-yearly intervals.
Platforms have been transformative in this regard, enabling 'always on' access to information that was once routinely presented only in the form of occasional reports. Not least in the midst of uncertainty, knowing precisely how investments are faring can count for a great deal.
Flexibility and confidence
The standard advice for investors during periods of turbulence is to stay calm. Stability and transparency can go a long way in this respect. Yet staying calm isn’t the same as doing absolutely nothing – which brings us to the heart of measured and effective responses.
Uncertainty at the macro level may well necessitate prudent adjustments to portfolios. Thanks to platforms, this doesn’t have to be a difficult and time-consuming task.
MPS providers are key here. They can expedite real-time oversight, tactical repositioning, sensible diversification and clear communication – all important considerations when markets seem to pose potentially awkward questions day after day after day.
This kind of flexibility also breeds confidence. Ultimately, this is what investors really want – confidence in the combined ability of platforms, providers and advisers to meet their needs, irrespective of the ever-shifting geopolitical and geoeconomic landscape.
Mark Maplesden is Novia Global’s Principal Representative Officer in Dubai
