03.09.2012 - SWFs should design early warning signals to help predict market shocks
Sovereign wealth funds can take advantage of warning signs such as rising commodity prices to help them reduce the risk in their portfolios in advance of market shocks, according to BNY Mellon. 'It appears to be counter-intuitive, but a sovereign wealth fund that is sensitive to changes in commodity prices should begin moving into more liquid assets as commodity prices are peaking instead of waiting for them to decline,' said Rumi Masih, senior investment strategist for BNY Mellon's Investment Strategy and Solutions Group (ISSG). Masih made the comments during a roundtable discussion including BNY Mellon investment professionals and a senior advisor to sovereign institutions. The primary purpose of the roundtable was to rethink traditional investment and risk management models to help sovereign wealth funds become better stewards of their national wealth for current and future generations. (Press Release)
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