What advisers should make of today’s mad markets
How are your investments performing through today’s seesawing geopolitics? It has been a crazy on-again, off-again kind of year where today’s 50% United States trade tariff falls to 15%, then to zero, before skyrocketing to 100% on a presidential whim; or where today’s annihilation of Iran fizzles to another ‘maybe tomorrow’ threat.
Investing during extreme volatility
It came as no surprise, dear reader, when your writer found himself at a discretionary fund manager (DFM) presentation themed ‘Everything everywhere all at once: Managing investments during a time of extreme volatility’. The event, hosted by investment platform and DFM partner INN8, offered some useful commentary on investing methodologies and global asset class allocation.
Sonal Bhagwan, a portfolio manager at the firm, described the current investment landscape as one of resilient markets in a very fragile world. “Geopolitics has been a strong macro driver of markets,” Bhagwan said, commenting on fragmented global trade due to a resurgence in protectionism and trade tariffs. You should know that story off by heart by now, dear reader.
Conflict remains top of mind too, with the now four-year-old Russia-Ukraine war fading behind a growing Middle East disruption. As US and Israeli military action against Iran continues into a fourth month, consumers face a nightmare of inflation on the back of energy price shocks. Your clients are experiencing this shock on two fronts, namely the rising cost of petrol and diesel, and the inflationary effect of these prices on South Africa’s transport-dependent economy.
“The longer the war continues, the higher the concern around second-round effects,” Bhagwan said. Locally, the South African Reserve Bank (SARB) Monetary Policy Committee (MPC) has already responded, lifting the repo rate by 25 basis points with effect from 29 May. Despite all this doom and gloom, constituents of the US S&P 500 have, on average, managed a near 30% jump in earnings over the first quarter of 2026. You and your clients can thank the AI theme and rising capex by the hyperscalers for this outcome.
Consistency for the ‘win’
To find out how to invest your clients’ funds amidst this madness, INN8 welcomed three global fund managers to the table. Gautam Samarth, a portfolio manager at M&G Investments, offered consistency in philosophy as a major foil against market volatility. Each decision affecting the discretionary, multi-asset fund that he oversees hinges on two foundational pillars: valuation, which ensures multi-year investment potential from any asset, and second, a behavioural finance overlay, acknowledging that “price is influenced by more human-made factors.”
The second part of this philosophy has given rise to countless market sayings over time, including ‘be fearful when others are greedy, and greedy when others are fearful’ and your writer’s favourite, ‘the market can remain irrational longer than you can remain solvent’. Most of your clients will test the latter a couple of times over their investing lives. Samarth explained behavioural elements as “phases in markets where people get carried away by the next new fad, overpricing potential trends” or selling in panic when this market exuberance turns.
The second global fund manager to the stage was Gareth Witcomb, from the multi-asset solutions team at J.P. Morgan Asset Management. Here, the investment strategy is best described as applying a valuation, fundamental and technical lens to data-backed return assumptions for over 200 asset classes across a number of geographic regions. The fund manager said its fundamental and technical view of the US equity market circa June 2026 was strong enough to overpower the headwind of stretched valuations.
Help me to help you
Third to the plate, Ross Cartwright, a lead strategist at MFS Investment Management, summarised his firm’s approach as helping financial advisers help clients. He offered a lengthy explainer of global equity and fixed income opportunity identification, which boiled down to a bottom-up, earnings-driven stock selection process. In plain English, this means choosing companies based on the strength and sustainability of their earnings. In contrast, a top-down approach starts with a macro picture before deciding which shares will outperform in it.
The first question worth unpacking exposed how investment decision makers treated uncertainty. “Today’s macro environment feels unprecedented in terms of the nature of and combination of events that we are having to deal with as investors,” Samarth said. “But people always say the world is unusually uncertain.” Those advising clients on portfolio selection, or deciding the asset class mix or instrument selection at a fund manager, have to deal with surprises every day. To prosper in such a world requires accepting that you cannot foresee the future.
Witcomb agreed that uncertainty was part and parcel of the investing landscape, pointing to the 1987 crash and big market corrections following the dotcom bust, the global financial crisis, the European debt crisis and the COVID pandemic. Over 2025 and year-to-date to 31 May 2026, markets have navigated narrow global leadership, the impact of AI and extreme concentration.
“We are dealing with a very unique set of circumstances at the moment, but we have had lots of events over the last 20 or 30 years that have felt similar,” he said. Constant change is something advisers and their clients have to deal with.
Concerns over concentration risks
Cartwright put a different spin on current events, saying markets are disconnecting from economies. How the S&P 500 index will perform over the year becomes a guess on what technology will do rather than a GDP growth, inflation or interest rate view. He warned about the concentration risk in major indices globally. In the US, some commentators now talk about the Magnificent Nine, as companies such as Broadcom and Micron join the trillion-dollar market-cap club. Locally, recent JSE performance has been driven by mining and precious metals counters.
Another fascinating discussion developed around how to deal with concentration risk when following a contrarian or value-based strategy. This is something financial advisers often take flak for, with clients asking why their diversified portfolios do not emulate the returns generated by Alphabet or Meta or Nvidia or insert flavour-of-the-month tech share here. “You have to get on the right side of these trends, and then scale capital in a very tactical fashion while staying on these trends,” Samarth said. You can then use valuation as something of a sanity check.
Witcomb said his funds were “quite happy to lean into the US tech sector” represented by the hyperscalers and others riding the AI theme. “Certainly, within our framework, the valuations on these companies look high; but they are delivering on earnings,” he said. So, for as long as the company has high earnings potential, and delivers on that potential, asset managers appear content to endure some concentration- and valuation-related discomfort.
Avoiding benchmark myopia
Cartwright positioned his response in the context of most risk allocation frameworks being based around a benchmark: “You do not own the market; you own a benchmark which is someone’s interpretation of the market.” The broader argument is not whether any particular index is correctly or incorrectly constituted, but whether the constituent shares suit the individual investor’s return objectives.
As a parting gift, the global fund managers were asked about the outlook for US equities at current valuations. Witcomb said they had been long US equities for some time, and expected the asset class to continue growing above trend through 2026. Samarth took a more neutral stance, saying they were ‘short’ the US S&P 500, using the windfall to buy non-US equity exposure to the dominant technology theme. And Cartwright admitted to remaining “very constructive on the AI capex story.”
Writer’s thoughts:
The disconnect between financial markets and the real economy is testing the adviser’s role as investment guide. How are you helping clients balance the push and pull of extreme valuations, geopolitics and index concentration? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
