Superannuation funds and other long-term investors’ success in the wake of the liquidity crisis will depend on their governance arrangements, according to Watson Wyatt, which has urged investors to eschew immediate strategy changes to cash in on emerging opportunities.
In the short term, Watson Wyatt believes asset managers have plenty of opportunity to benefit from the turmoil in the bond and credit markets. And once the short-term economic uncertainties are resolved, this may create a longer-term opportunity to increase exposure to the credit risk premium more generally, at relative pricing that is more favourable than it has been for some years.
As for the long term, the most successful institutional investors will adopt much more dynamic and long-term investment strategies, according to Watson Wyatt, which believes being long term does not mean acting slowly.
Rather, investors should make changes based on long-term principles, the company has advised.
