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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......................

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