RISK ADJUSTED RETURN
We live in a world in which the assets which have traditionally been considered to be low risk scarcely offer a nominal return. This is what many call “financial repression”.
In search of investment solutions for conservative profiles
The Great Financial Crisis led to a massive response from the main monetary authorities. In an effort to save the financial system, a number of drastic measures were taken, such as the cut in interest rates to minimal levels and quantitative easing programmes. The collapse was averted, but the measures generated side effects that have lasted right up to the present times. At least for those now wanting to make conservative investments.
This is what many call “financial repression”. A world where low risk assets scarcely generate a nominal return. This is best exemplified by the interest rates of 10-year sovereign debt in different European countries.
Active and professional management has become more necessary than ever before
This lack of return from sovereign debt assets has been passed onto other types of assets, such as corporate debt to certain segments of the stock market considered defensive, with dividend and low volatility (bond-proxies). Thus, investors have been forced to increase the risk in a desperate pursuit of yield and keep returns stable.
In the face of such a complicated scenario, active and professional asset management has become even more necessary for the conservative investor seeking to obtain a reasonable risk adjusted return. But it is imperative to take a step further towards alternative strategies and market areas outside of the radar of more traditional investors.
THE EXPERTS’ OPINION
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