[ad_1]
Like many people in the UK, I own shares within an ISA and SIPP (Self-Invested Personal Pension). Historically, investing in equities via these accounts has been an effective way to build wealth.
Looking ahead, I still like shares as an asset class, but I do see a few risks to the market. With that in mind, hereâs how Iâm positioning my portfolio.
The risks
There are two main risks I see right now. The first is a near-term economic slowdown due to elevated oil prices. The second is a significant drop in consumer spending due to AI-related layoffs. Of the two, this one concerns me the most.
Now, neither of these scenarios may come to fruition. But I want to be prepared just in case. After all, this is my retirement money weâre talking about. I donât want to see it disappear (bear in mind Iâm in my mid-40s).
My asset allocation
Given these risks, Iâve made a few recent changes to my asset allocation. Firstly, Iâve dialed down my equity exposure a bit â overall my portfolio is now about 70% shares.
Second, Iâve increased my bond holdings so that theyâre now about 10% of my portfolio. These are lower risk investments and they could do well if interest rates fall as I expect them to (bond prices rise when rates fall).
Third, Iâve boosted my money market/cash holdings to 20% of my portfolio. This lowers my overall risk and gives me options if stock market opportunities emerge.
My stocks
Zooming in on my shares allocation, this encompasses index funds, active funds, thematic funds, and individual stocks. In terms of individual stocks, Iâm still heavy in five of the Mag 7 companies â Apple, Amazon, Microsoft, Google, and Nvidia. These are all long-term holds for me.
Iâve been trimming/selling a few other tech names though. Iâve done this mainly to reduce risk. One area of the market Iâm trying to minimise exposure to is discretionary consumer spending (given the AI risk). There are some good names in this space, but I want to keep my exposure to a minimum.
Looking ahead, I plan to refine my stock portfolio further. Iâm thinking of focusing it on two main areas:
- The AI/tech buildout: chips, data centres, power.
- Defensive businesses: Food, healthcare, defence.
This would basically be a play on further digitalisation. In theory, the AI stocks should do well as the world becomes more digital while the defensive shares should provide protection from a consumer slowdown.
A stock Iâm looking at
One company Iâm considering adding to my portfolio as a defensive play is Tesco (LSE: TSCO). No matter what happens in the economy people are always going to need food.
If the economy or consumer spending takes a turn for the worse, Tesco shares should hold up better than a lot of other stocks. The company could even see a higher valuation in the years ahead due to the fact that it looks immune to AI â this is very much a âHALOâ stock â heavy assets, low (chance of) obsolescence.
Of course, if the economy tanks, consumers may ditch Tesco and flock to Aldi and Lidl. This is a risk. Overall though, I see it as a safer pick, despite the fact itâs trading at an above-average valuation. A dividend yield of 3% adds weight to the investment case.
The post Amid geopolitical and AI risks, hereâs how Iâm positioning my ISA and SIPP in 2026 appeared first on The Motley Fool UK.
Should you invest £1,000 in Tesco PLC right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Tesco PLC made the list?
.custom-cta-button p
margin-bottom: 0 !important;
color:#cc0000;
div.entry-footer div.textwidget div.braze-content-card div.wp-block-custom-block-collection-presentational-card
padding: 0 !important;
margin: 0 !important;
More reading
- My game plan for the next stock market crash
- Up just 1%: what’s going on with Tesco shares now?
- Under £5 now! Hereâs why I think Tescoâs share price should be trading closer to £7
- £10,000 invested in red-hot Tesco shares just 1 week ago is now worthâ¦
- How much would someone need in a Stocks and Shares ISA to target an annual income of £20,855?
Edward Sheldon has positions in Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool UK has recommended Alphabet, Amazon, Apple, Microsoft, Nvidia, and Tesco Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
[ad_2]
Source link