Perspectives: Risk-managed approach more essential than ever in 2017
With the surge in market optimism in the second half of 2016 and continuing into the first months of this year, some investors might be tempted to raise their risk budgets and increase their portfolio exposure to market beta.
However, we urge investors to maintain a robust risk-managed investment approach to equity investing, to help navigate the potentially choppy waters ahead. We believe there could be a number of headwinds this year. This paper highlights some of these potential risks, in particular, political, valuation and inflation risk, as well as the state of the Chinese economy. We illustrate how Unigestion’s risk-managed approach has positioned investors’ portfolios to reduce the impact of these risks and safeguard against market drawdowns in 2017, including the pullback seen in March.
Last year the equity markets initially got off to a shaky start, with concerns focusing on Chinese growth and the weak oil price. However, global equities rebounded, spurred on by a recovery in commodity prices, a surprisingly resilient Chinese economy, relatively dovish central banks and improving growth outlooks.
Despite the multitude of obstacles along the way, in the form of US interest rate rises, the Brexit vote, the referendum in Italy and concerns over the country’s banks’ bad loans, uncertainty as to an OPEC deal, and finally the elections in the US, the markets maintained a positive, if bumpy, trajectory.
Read the complete white paper at the link beneath Related Files