Fund managers need to prepare for ‘new normal’
Fund managers need to be ready for the ‘new normal', as they are operating in the unprecedented times of geopolitical risks, where downside risk protection and alternative funds are becoming regarded as mainstream investment opportunities, according to Henderson Global Investors.
At the same time, momentum around the debate on active versus passive investment would continue to grow.
The fund manager told an investment briefing in Sydney that there would be a number of areas of concern in this new reality including globalisation, digital disruption and zero interest rate policies and these trends would have implications for client portfolios.
Henederson's head of Australian equities, Lee Mickelburough, stressed that some of these trends had peaked and may reverse.
He also noted that despite the uncertain environment investors were operating in, it was unusual to see such low volatility. However, if factors such as political stability reversed, volatility would increase, he added.
"The good news is if you are looking to reposition your client portfolios it is not too late. The markets are high, volatility is low, there is plenty of opportunity to reposition," he said.
Henderson as ‘passionate active investor' believed that active investing and stock picking is going to continue adding value.
"We think the solution is really taking the market-neutral approach which is going to take advantage of the stock picking opportunities going forward," Mickelburough said.
According to Henderson's executive chairman, Rob Adams, the current mood for change would also bring uncertainty and volatility leading to downside risk protection, with more focus on concrete outcome than on relative returns.
"Regardless of where we sit in the margin, we are going to be impacted probably more by the focus on fees, right or wrong," he said.
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