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.
- 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.