Do You Need to Putin-proof Your Portfolio? (FE Trustnet)

FE Trustnet has an article noting that developments in the Russia – Ukraine crisis are fast moving and investors are split on whether they will have a significant impact on stock markets.


Rowan Dartington director Guy Stephens is concerned as “the ease with which president Putin was able to annex Crimea has exposed the vulnerabilities of neighbouring countries and he is exploiting the situation to the full whilst humiliating NATO, whose members have no stomach for military action.” He added:

“September/October is also often a tumultuous period and this issue could just be the catalyst for some weakness that current buyers stand back from in the short-term, thereby delivering a correction.”

FE Trustnet also noted that some managers have “Putin-proofed” their portfolios with energy, aerospace and defence funds/ETF to benefit from possible heightened tensions.


Kleinwort Benson chief investment officer Mouhammed Choukeir, isn’t so worried as he pointed out:

“It is easy to draw the conclusion that one’s asset positioning should be defensive during times of heightened conflict or stress. However, financial history teaches a different lesson: geo-politics rarely impact equity markets over the medium to long term…Geo-political crises, for all their horrific images, real-time press coverage and social angst, simply do not appear to affect markets often.”

Kleinwort Benson’s analysis of 16 serious geo-political crises since 1950 shows the S&P 500 was down 12 months later on only four occasions, including the Arab-Israeli war of 1973 and the September 11 attacks. However, the Cuban missile crisis in October 1962 was followed by a one-year gain of 34% in the S&P while a 13% rise came after the Six-Day War in 1967 between Israel and its neighbors.

To read the whole article, A new Cold War: Do you need to Putin-proof your portfolio?, go to the website of FE Trustnet. In addition, check out: How Canaccord Genuity’s Oliver is Hedging for Iraq & Ukraine Turmoil (FE Trustnet)

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