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Komfie Manalo, Opalesque Asia: Many investors and finance professionals hold the belief of a strong
link between risk and volatility. As a result, many investors have in a
way become like prop desks traders by looking at daily volatility or
weekly volatility, and thus shifting their investment horizon to
relatively short-term, claimed Michaël Malquarti, head of manager
research and alternative investments SYZ Asset Management SA. He believes that risk is not
necessarily linked to volatility.
Speaking at the last Opalesque Geneva Roundtable, Malquarti said that his
impression is that this linkage volatility = risk has created a lot of
biases in the way people build portfolios. "For example, a less liquid
instrument might be as risky as a liquid one, but you won’t see it in
the volatility," he stated.
Addressing also the long term outlook of asset classes, he told the
participants of the Roundtable, "Second, even if you consider only
liquid instruments, it’s very difficult to think that today a 10-year
Swiss bond will end up in 10 years’ time bringing you more return than
buying equities, whatever happens along the path. With a diversified set
of equities you also get some dividends, which over 10 years, even if
the dividends are cut down say by half on average, still provi...................... To view our full article Click here
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