Geopolitics has biggest negative impact on investments
The global geopolitical environment will likely cause significantly compromised investment returns during 2017 to 2019, according to the CFA Institute.
A CFA survey of 1,500 investment professionals worldwide found a majority of respondents believed changes to the global geopolitical environment would have a negative influence on returns, and held their highest concerns around Brexit, President Trump, and the fragmentation of the European Union (EU).
CFA president and chief executive, Paul Smith said: “Apart from the 20 years following 1989 and the fall of the Berlin Wall, geopolitical risk has in fact been a constant feature of financial markets”.
“It is also only one of many challenges and potential drivers of change in the investment industry,” he said.
Continental European professionals were most concerned about reduced market presence in the UK, while Brexit remained the highest cause of unease for British investment managers. While a total of 70 per cent of these survey respondents expected compromised returns, a large majority of portfolio manager respondents (71 per cent) also said they had not changed their investment strategies post-Brexit.
Over two-thirds (67 per cent) of investment professionals identified the election of President Trump as a major risk to the market, followed by the 2017 French elections.
Moving forward, Smith said investment managers and clients had to continue to build strong relationships and ride out the volatility.
“In this climate, it is crucial for investment management professionals to earn the trust of investors,” he said.
“We are enabling our global members and charterholders to understand the potential impacts of such shifts and ensure that they are equipped with the knowledge and skills to safeguard investors’ interests.”
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