Investors Should Protect Returns

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    Investors should re-consider their pain threshold and adjust their portfolios now to protect the returns they have made over the past five years, says Nicolas Rousselet, head of the hedge funds team at Unigestion, in the article ‘Parallels with the past: avoiding the next bubble.’ Equity and bond markets have been strong and some investors are drawing parallels with pre-crisis times. However, more worryingly, he says, are that concerns are emerging of bubbles bursting in the future. Future policy changes and shifts in market sentiment are another major vulnerability. This makes thinking about risk management more important than now at any time in the recent market cycle. “As prudent investors for our clients, we are wary of the growing parallels in the market between the pre-crisis period and today. There may still be gains to be made in equity and bond markets, but, in our view, the risk taken to generate returns is becoming increasingly less attractive.”