Reshaping the way we look at risk


This time it’s different

Reshaping the way we look at risk

Risk selection is the backbone of any search for growth in the context of long-term de-risking. By hedging some of the embedded risks, investors can free up space to invest in return engines.

Executive summary

  • Despite signs of a modest recovery, institutional investors are still on a long-term de-risking journey
  • Recent equity market rallies have aided investors on that journey, but there is little evidence at this juncture of any long-term ‘great rotation’ towards typical risk or growth assets (equities)
  • As the financial system adapts to the new reality of increased regulation and (potentially) a world without QE, volatility is likely to increase, further limiting investors’ risk appetites
  • A deep understanding of an institution’s prudential and investment framework allied with skilled, active asset allocation is necessary to navigate this new world
  • De-risking no longer means simply selling out of equities; re-risking no longer means simply selling out of bonds
  • Investors need to access the full toolkit to access growth while managing volatility

Performance issue 13 – January 2014

Performance is a triannual digest, dedicated to investment management professionals, which brings you the latest articles, news and market developments from Deloitte’s professionals and clients. 

Performance issue 13
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