Preserve capital and grind out alpha
Australians need to preserve their capital, grind out alpha, favour bottom-up strategies over beta and scour the world for diversity, as potential future corrections were on the horizon, according to fixed income fund manager, PIMCO.
Whether Australians were transitioning from family owned enterprises to a diversified portfolio, or were in decumulation phase, investors needed to generate sustainable income that supported their spending habits, amid low interest rates and high volatility, the firm said.
PIMCO's managing director and head of Asia Pacific, Eric Mogelof, said capital preservation should be investors' number one priority.
"Riding a wave of unstable betas — all correlated to central bank polies — is no longer a strategy for success," he said.
Low passive returns are insufficient for both retirees and high net worth investors. So, investors could boost their returns with active management, he said.
"Moreover our secular outlook cites several additional left tail events that could increase the potential for capital losses and write downs — populist shocks like the recent ‘Brexit' vote and political gridlocks are two examples."
Higher market volatility also created opportunity and careful portfolio construction helped investors buy into undervalued assets, he said.
Recommended for you
The Federal Court has issued its verdict in ASIC's first greenwashing case against Vanguard Investments Australia regarding the use of ESG exclusionary screens.
Investment managers who plan to implement artificial intelligence in the next five years expect to see increased productivity, but views are mixed on whether it will boost revenue and assets under management.
A former corporate adviser has been sentenced in the Supreme Court of Western Australia for insider trading to realise a profit of more than $57,000.
Private markets expertise is sought-after for investment operations hires as allocations to alternative assets rise, according to a recruitment firm, but there is a gap between demand and supply.