Active investor:

It pays to keep a clear head in portfolio planning

With the pace of change that is happening today, investors are faced with more choices and information than ever before. The key to navigating the investment landscape is to focus on the elements that matter.

Depending on the type of investor, there is a mixture of factors investors can consider, says Kurt Reiman, global investment strategist, BlackRock Investment Institute. “The best thing to do is start with economic fundamentals and try to balance this against the value of the assets within that part of the economy.”

Decisions should not be based on projections alone, he says. “The U.S. started off the year with forecasts for strong economic growth. It turns out that was too optimistic. At the same time, the reverse happened in Europe and Japan. Everyone was braced for a lot of bad news, but they have actually fared better than U.S. markets.”

More importantly, investors should not focus too much on day-to-day changes, he adds. “One day Greece was going to reach a resolution with creditors. The next day the odds were low. We never know what tomorrow is going to bring in these circumstances. Too much information, in fact, can lead to paralysis and, in some cases, poor investment decisions. It’s one thing to be informed. It’s another to be saturated with information.”

Often short-term shifts based on the probability of certain big events are distractions rather than real indicators. “If you look at large crisis-style events over the past 10 years, often the markets look right through them. Sometimes — such as the financial crisis — the crisis is a really big deal for markets,” Reiman notes.

Investors can reduce their risk by taking a strategic approach to diversification. In that way, some asset classes will perform well under cer-