'Unipol stands out for its dividend'

David Barron, Head of Index and Etf at L&G still expects a lot of volatility in the coming months and emphasises the importance of betting on solid companies with a profitable dividend policy. among the sectors he points out especially financials.

Until the outbreak of the conflict in Iran, the global environment appeared to be on the rise, with the major central banks moving in the right direction. On the one hand, the Fed was approaching the end of its cutting cycle, while on the other the ECB was firmly in a wait-and-see position. However, uncertainty has grown a lot since then and today's market outlook depends on future geopolitical developments and in particular on the duration and potential escalation in the Middle East. What initially appeared to be a contained and short-term affair has now entered its seventh week and should the situation in the Strait of Hormuz escalate further, then the implications for inflation could become more serious, complicating monetary policy and market direction expectations. In this context, it is almost mandatory to navigate by sight, without following a predefined trend.

Commodity prices and disruptions in global production and supply chains are key issues that we monitor closely, given the potential impact they can have on both financial markets and economic growth. But beyond the immediate effects, it is also essential to pay attention to secondary consequences, such as pressure on corporate margins, changes in consumer habits and inflationary dynamics in general. Energy security is also a key issue, with investments in renewables playing a key role in creating resilience and supporting long-term dividend sustainability.

Volatility will be a travelling companion for a long time to come and they should be fully aware of how exposed they are to market fluctuations. One way to manage them might be to focus more on stable sources of income, such as dividends, which can provide more linear and predictable cash flows and help diversify away from market betas alone. A diversified approach with a more balanced weighting can be effective, as it helps to avoid overconcentration in stocks with high valuations and can reduce the overall volatility of the portfolio, while fostering more balanced results in the long run.

We focus on companies with solid, consistent dividend growth, attractive prospective yields and strong, resilient balance sheets that can sustain dividend payments over time. The portfolio construction emphasises diversification through an equal weighting methodology, which helps to reduce concentration risk and increase exposure to small- and mid-capitalisation companies compared to traditional global equity strategies. The index design is based on internal rules, ESG parameters, broad sector representation and regular rebalancing to support income generation over time and long-term resilience.