Key points
- Investment expert advises investors to spread funds across multiple asset classes
- Diversification can help reduce risks and improve long-term returns
- Recommended options include mutual funds, ETFs, bonds, treasury bills and real estate
- Equities remain attractive but are vulnerable to market cycles and volatility
- Limited understanding of collective investment schemes is slowing adoption
Main story
Investors have been advised to diversify their portfolios beyond equities by embracing alternative investment vehicles that can reduce risk, preserve wealth and improve long-term returns.
The Managing Director of Globalview Capital Ltd., Aruna Kebira, gave the advice in an interview with the News Agency of Nigeria (NAN) in Lagos. Kebira said diversification remains one of the most effective risk management strategies, helping investors avoid excessive exposure to a single asset class or market segment. He recommended combining equities with mutual funds, exchange-traded funds (ETFs), bonds, treasury bills, real estate and other suitable financial instruments.
According to him, diversified portfolios allow investors to spread risks across different asset classes and benefit from varying market conditions. Kebira explained that diversified investment products provide exposure to multiple assets, reducing the impact of downturns in any one market. He noted that many investors continue to focus heavily on equities because of the potential for capital appreciation and dividend income.
However, he said this preference often prevents investors from taking advantage of opportunities available in other investment products. The economist added that while equities can generate strong returns, they are also exposed to market volatility and economic cycles. He further attributed the low adoption of mutual funds and ETFs to limited understanding of how such investment vehicles operate.
According to him, many investors are more familiar with buying shares of individual companies than investing in professionally managed funds.
The issues
- Importance of portfolio diversification
- Managing investment risk during market volatility
- Limited investor awareness of mutual funds and ETFs
- Balancing growth opportunities with capital preservation
- Long-term wealth creation strategies
What’s Being Said
“Diversification remained one of the most effective strategies for managing investment risks,” — Aruna Kebira, Managing Director of Globalview Capital Ltd., explaining why investors should avoid concentrating their funds in a single asset class.
“Equities have seasons. There are periods when the stock market performs strongly and periods when it experiences declines. Investors who concentrate all their funds in stocks expose themselves to unnecessary risks. — Kebira, warning against excessive dependence on the stock market.
“If the capital market is declining, investments in the money market or fixed-income securities can help support the portfolio. When equities begin to recover, gains from stocks can strengthen overall returns.” — Kebira, describing how different asset classes can complement each other across market cycles.
“When you invest through mutual funds, your money is not invested only in stocks. Fund managers allocate funds across different assets, including bonds, treasury bills and money market instruments.” — Kebira, explaining how collective investment schemes help spread risk.
“Many investors understand dividends and capital appreciation from stocks, but they do not fully understand concepts such as distributions and net asset values, which are common in mutual funds.” — Kebira, highlighting the knowledge gap limiting wider participation in diversified investment products.
What’s next
- Investment managers are expected to intensify investor education on mutual funds, ETFs and other collective investment schemes.
- Investors may increasingly explore fixed-income and alternative assets as they seek protection from market volatility.
- Greater awareness of portfolio diversification could drive higher participation in professionally managed investment products.
Bottom line
The message from investment experts is clear: investors who spread their funds across different asset classes are better positioned to manage risk, withstand market fluctuations and achieve sustainable long-term returns than those relying solely on equities.
