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From Christine Gaylican, Opalesque Asia:

Although markets are on the way to recovery, investment and asset managers are still seen grappling with downside risks, while optimizing risk-adjusted returns in the next 24 months.

HSBC Asset Management has drawn the best way forward for investors and managers as the year 2010 is expected to bring extreme volatilities than this year.

HSBC asset managers, in its November commentary (Source ), said it was time to seek non-traditional strategies that would not just allow businesses to survive, but be able to emerge in top form as well.

The study cited that “traditional diversification tactics may no longer be sufficient for managing downside risk.”

“Today, countries’ equity markets can be 80% or more correlated, especially during the times of extreme volatility. Simply diversifying across traditional asset classes like equities and bonds is no longer enough to smooth out the risks that have evolved over time and may limit the range of potential return,” HSBC said.

Having bi-polar investment behaviour should be avoided to prevent losses, it further said.

Avoid bi-polar investment behaviour, have a core investment practice

HSBC cited the bi-polar investment behaviour of Hong Kong investors, which meant, they are either extremely “concentrated on high risk investment (su......................

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