Dubai: Investors bruised by the volatility seen in the fourth quarter are wary of putting all their monies in equities alone. They are now investing in multi-assets and tactical strategies.
A breakdown in correlation between asset classes was the prime reason for investors to move into equity-only funds, and going ahead volatility is expected to be an unavoidable feature in markets due to slower global growth and as central banks move from quantitative easing to tightening.
“Last year we had a net outflow as diversification was not rewarded in the last 2-3 years, so our absolute return fund lagged behind the equity market performance especially in 2017 so a lot of investors didn’t believe in keeping money, so we saw outflows.
"But that money has started to come since the end of last year again. We are optimistic going ahead (on flows),” Andrea Wehner, Investment Director, Multi-Asset Investing at Aberdeen Standard Investments told Gulf News while on her field visit to the UAE.
The absolute fund strategy gave promising returns to investors since the start of the year, pencilling 2.52 per cent returns since January 1.
“When the markets fall, our fund captures only a third of that fall. We have shown we can capture that upside, but what we need to show the investors is that we would be able to capture the upside over the longer-term depending on how the markets would move,” she added.
Institutional clients in Asia are also investing in tactical strategies.
“We have market moving from an environment where we had many years of quantitative easing, and now we are moving to quantitative tightening. It’s not a bad idea to look into tactical allocation,” Wehner said.
She advises investing money in liquid alternatives, real estate and infrastructure funds.