Shaw and Partners’ Fraser MacLeod on why diversifying investments is key amid volatility

The sharemarket is in for a rocky ride as the world braces for the fallout from Donald Trump’s tariffs. But there’s one simple way to protect your nest egg.

Gold and other alternative assets are becoming an increasingly important addition to the portfolios of private investors looking to ride out the current volatility in equity markets, according to the local head of wealth management firm Shaw and Partners, with geopolitical uncertainty likely to weigh on global markets for the remainder of the year.

While the Australian sharemarket has made up the ground it lost during the market crash that followed US President Donald Trump’s sweeping tariffs announcement in April, a 90-day pause on most of the new import duties expires on July 9, and the president is facing a legal battle over his right to execute the tariffs policy.

Shaw and Partners SA state manager Fraser MacLeod says the trade and geopolitical uncertainty is likely to linger for the rest of the year, and the heightened volatility is causing many investors to consider alternatives to equities.

“There’s a lot of noise in markets at the moment ... and this year there’s been much more volatility,” he said.

“There are some concerns over markets over the next six months ... there’s a bit more of a concern over the geopolitical risk and part of the question must be protecting portfolio downside.

Shaw and Partners adviser Jed Richards, state manager Fraser MacLeod, chief executive Earl Evans and office manager Natasha Bartlett. Picture: Supplied

“From an asset allocation point of view, especially over the past few years, we believe there’s a place for holding liquid alternatives. For many investors, we blend between traditional domestic portfolios, international portfolios and blending also with alternatives to enhance diversification and potentially improve returns.

“And that could be more commodity driven, that could be more direction driven, with equity long-short, credit long-short, managed currency and gold.”

If the market volatility isn’t enough to keep investors on their toes, the federal government’s proposed tax hike on superannuation balances above $3m is looming as another threat to the savings of high-net-worth investors.

Mr MacLeod warns of the “unintended consequences” of the policy, which has become a major worry for investors as Labor works with minor parties to secure passage of its proposed legislation through parliament.

“If you’ve worked hard on the promise of a tax position, and now that’s changing, that is a bit unsettling for clients – there’s certainly a risk there and we’ve been getting quite a few phone calls,” Mr MacLeod said.

“We are guiding clients to be alert but not alarmed, taking a proactive approach and considering tax-effective wealth strategies is more important than ever.

“And there might be some unintended consequences. It may cause some to question super balances and explore alternative structures.”

Shaw and Partners celebrated the 10th anniversary of its Adelaide office opening last week, with the local team growing from a single adviser in 2015 to 29 advisers and support staff a decade later.

Mr MacLeod said the firm had a proud history of supporting local sporting groups and charities, and the Shaw and Partners Foundation had donated another $50,000 to Adelaide charities as part of its 10-year celebrations.

“It’s been an incredible journey. From our humble beginnings we’ve grown into a cornerstone of the state’s financial landscape,” he said.

Shaw and Partners chief executive Earl Evans added: “10 years in Adelaide, incredible how fast the time has gone, the growth in team we have had and the size of the office.

“Quality people, quality office and quality operation servicing the wonderful people of Adelaide – couldn’t be prouder.”

Originally published as Shaw and Partners’ Fraser MacLeod on why diversifying investments is key amid volatility