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Bailey McCann, Opalesque New York: Investment risk in the market may be underappreciated according to delegates at the recent Opalesque West Coast Roundtable.
"There seems to be a
growing attitude among investors that a 5% return is better than a 4% return, even if it comes with twice the risk," says Brian Lahart, Head of Alternative Investment Research, Abbot Downing.
That view may seem surprising in light of Friday's significant sell-off in US equity markets, but many investment managers we spoke to on Friday seem to be holding steady, waiting to see if Friday's correction has legs. Others cited positive indicators in the US economy, and investors as ever are still hunting for yield. Yet, in light of recent events and the extended bull run some are making moves to get a bit defensive and protect capital.
"We think investors should
consider increasing allocations to strategies that are structured to navigate or exploit a more volatile environment
such as certain hedge fund strategies and certain private debt strategies," Lahart adds. "There has been a lot of press and media coverage around a possible liquidity problem in some bond
markets, yet yields remain low and volatility generally subdued. Alternative strategies that have a
decent short exposure in certain fixed income instruments – where prices are stretched and do not
provide much more upside – could be compelling. We also like alternative strategies that can profit
from an increase in market v...................... To view our full article Click here
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