Prolonged uncertainty in financial markets has become the new norm: geopolitical tensions, inflation and interest rate fluctuations force investors to look not only for profitability, but also for stability and a clear framework for decision-making. 

BlackRock, a leading global asset manager, and Luminor Bank argued in a recent visit to the Baltics that in an environment of heightened market volatility and growing investor caution, structured and diversified investment solutions that help maintain discipline across different market cycles are becoming increasingly important. Global investment principles can be applied locally through practical solutions such as model portfolios that consider the behavior, risk perception and crisis experience of Baltic investors. 

A global approach meets local realities 

Model portfolios and multi-asset solutions give the investor a clear risk profile and disciplined balancing of the investment portfolio. But in order for them to really work for the client, the global approach needs to be adapted to local experience and risk perception. 

“Latvian/Estonian/Lithuanian investors are increasingly looking for stability and clarity – especially after the crises and market fluctuations they have experienced. Our task as a local bank is to be a bridge between the global investment experience and the client’s daily decisions, offering solutions that are understandable, diversified and in line with how risk is perceived in the Baltics. BlackRock’s global expertise, combined with Luminor’s understanding of the needs of Baltic clients, allows us to create solutions that are tailored to the local more conservative risk perception and investment culture, where trust and advice continue to play an important role,” says Dina Tracuma, Head of Luminor Private Banking in Latvia. 

Discipline and diversification: the basis for investing in volatile markets 

In volatile markets, long-term results are more often determined not by attempts to “guess the right moment”, but by a clear investment plan and consistent risk management. 

“Uncertainty is a constant in markets – whether from inflation, central bank decisions or geopolitical tensions,” says Olivier Pauwels, BlackRock’s EMEA Head of Model Portfolio Solutions for Wealth. “A clear investment framework and diversification can help investors stay anchored to long-term goals, even as short-term noise increases. To be effective, global investment principles must also be adapted to local market realities, investor experience and risk perceptions”. 

A small market does not mean simpler needs 

A small market does not mean simpler needs. The investment culture in Latvia/Estonia/Lithuania is still developing, and the experience of previous crises often leads to a more cautious approach. Therefore, local investors often prefer solutions that are professionally designed and at the same time clearly explained. Local banks have a “bridge” role here – adapting global principles to market specifics, regulation and customer behavior, with a stronger emphasis on diversification, gradual risk-taking and a long-term view in practice. 

After a period of low interest rates, the investment environment has become different: the price of capital is once again an important factor, and with it the need to consciously balance risk and return targets is increasing. Globally, therefore, the financial sector is increasingly favoring standardized, transparent portfolio solutions with a clear risk profile and regular review, rather than a fragmented selection of individual instruments. 

How investor behavior changes during crises

In recent years, uncertainty has changed both investor behavior and how banks shape investment solutions. Instead of choosing individual instruments, the focus is increasingly on structured approaches with clearly defined risk levels, diversification and portfolio balancing principles. 

In times of crises and fluctuations, investors’ questions are increasingly shifting from “what to buy” to “how to invest and keep calm.” Structured solutions help to reduce the risk of impulsive decisions in moments of decline, basing the investor in a clear plan with certain levels of risk and balancing principles. Since it is impossible to predict the next crisis, a disciplined portfolio that is ready for different scenarios becomes one of the most important prerequisites for a long-term result.