Focus Needed On Substantial Risks

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    While there are indications that this year will see broader growth, led by improving economic conditions in the U.S. and China, institutional investors still need to focus on managing the substantial risks that remain, says Mercer. Although uncertainty remains over the global economy, if the corporate and private sectors shift their state of mind to low growth from no growth, it will bode well for risk assets such as equities. As well, wage restraint, corporate restructuring, and an improving credit environment in parts of the U.S. and western Europe could also signify a revival of market spirits. However, it predicts a ‘more of the same’ scenario will apply to Europe and possibly the U.K. Given this forecast, it is encouraging clients to maintain broadly diversified asset portfolios, hedge against inflation, consider reducing commitment to ‘safe haven’ assets, improve shareholder engagement, avoid unnecessary turnover, manage capital efficiently, and flexibly manage portfolios.