Category Archives: Investment insights

Lessons from our elders

22% of people in pension phase feel underfunded, globally  Funding retirement is at the forefront of many people’s minds, but how well are they preparing for it and how do those already in retirement feel about their situation? We spoke to over 22,000 people who invest from 30 countries around the globe about retirement to see if and how expectations differ from reality.

For the full results of the Schroders Global Investor Survey, read more here…

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What if we are right?

Implications of low return forecasts for Balanced Funds

The point of this note is to highlight the embedded shortfall risk in a typical fixed SAA investment strategy (e.g. the typical Australian balanced fund) should returns be low (and clustered) as we currently project.
Aggressive asset allocation within narrow ranges is also unlikely to solve the problem given the structural anchoring to equity market outcomes and the relatively narrow tactical ranges… this is an inherent structural flaw within the SAA model.
The practical implication is that this significantly limits the ability of managers of these types of portfolios to “turn the dial” sufficiently in an environment of compressed and clustered returns or where equity returns are moderate.

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The volatility paradox

It is widely acknowledged that the outlook for economies and investment markets is unusually uncertain, given the huge political changes that we are witnessing across the world. It is also widely acknowledged that most assets are expensive and most likely are priced to offer sub-normal prospective returns. Why then is volatility (the VIX) so low? History tells us that periods of crisis are often preceded by periods of abnormally low volatility and complacency about risk and valuations. Are we in one such period?

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