Financial Advisor at Saron Investments

Alexandre Fuentes van Amson, Head of Asset Allocation

The Path to Long-Term Portfolio Resilience

Alexandre Fuentes van Amson

Investment Allocation Authority

Global and Domestic Forces Shaping Investment Decisions

The forces I watch most closely are inflation pressures in the major economies, the path of interest rates at home and abroad, the disruption artificial intelligence may bring to earnings and valuations and geopolitical dynamics, from military conflicts to trade fragmentation. For Brazil, domestic factors will likely matter at least as much as global ones over this horizon, the presidential election and the fiscal and economic choices of the next mandate, will shape asset prices in ways that are difficult to anticipate.

Building Resilience through International Exposure

The correlation between the returns of domestic and global asset classes, the latter measured in Brazilian Reais, is typically low and at times negative, largely because the hard currency itself tends to move independently of Brazilian assets. That is precisely what makes the offshore allocation a natural complement to the domestic one. The Brazilian market remains small and concentrated and it exposes investors to the risks of a developing economy. From a Brazilian retail investor perspective, I therefore believe that a meaningful offshore structural allocation, in hard currency, provides efficient diversification, depth and protection of purchasing power that the local market alone cannot offer. Domestic opportunities still deserve a real place in the strategic mix, inflation-linked government bonds, in particular, currently offer historically elevated real yields. Currency swings can hurt in the near term, but over long horizons a hard-currency allocation tends to pay off. The appropriate weight of the international component depends on each investor's objectives, obligations and long-term planning.

Balancing Tactical Adjustments with Long-Term Strategy

Most of what a portfolio delivers over time comes from its strategic mix, less so from trading around it. So, my first principle is to give the strategic allocation the bulk of the effort, multiple scenarios, thorough analysis and full alignment with the investor's objectives and risk profile. My second is to distinguish risk that can be priced from uncertainty that cannot. When uncertainty is high, as I believe it is now, a more balanced, generally defensive approach makes sense, with a reserve of liquid, low-risk assets that preserves the ability to act. Tactical moves should stay bounded, though, they adjust the course, not the destination. My third principle is discipline against noise. Most retail investors do not have time to follow markets closely and the massive flow of information and misinformation makes it harder than ever to separate facts from headlines. A predefined and robust process protects against one's own biases and the risk of overreaction.

“What investors can do is build portfolios that do not depend on being right about the future; and then give them the time and the discipline to work.”

Learning from Market Cycles through Disciplined Investing

The illusion of market timing. The pandemic shock was the clearest recent case, those who sold into the decline often locked in losses, while those who simply rebalanced back to their targets were better positioned when the recovery arrived sooner and stronger than almost anyone expected. The lesson is not that rebalancing always wins, in some downturns, selling early would have been the better move. The lesson is that no one can be certain of which kind of downturn they are facing; a discipline that does not depend on that judgment spares investors from having to get it right. Because winners cannot be consistently picked, markets cannot be reliably timed and tail events sooner or later materialize, diversification and a rules-based rebalancing discipline remain the most reliable tools I know.

Creating Portfolios Designed for Long-Term Goals

Start by rethinking what risk means. In a country where interest rates have been historically high, instruments tied to short-term nominal rates feel safe because their prices barely move. But low volatility is not the same as low risk, there have been long periods when those investments quietly lost purchasing power or substantially underperformed other asset classes even as statements showed steady gains. The risk that matters is failing to meet one's objectives, not the day-to-day movement of prices. The mindset I would recommend is resilience over prediction. A diversified and balanced portfolio that optimizes its risk-return profile, anchored in assets that protect real purchasing power over long horizons, improves the odds of reaching long-term goals. Odds, not certainty, nothing in this business is guaranteed. What investors can do is build portfolios that do not depend on being right about the future and then give them the time and the discipline to work.