Preserve capital and grind out alpha

5 September 2016
| By Anonymous (not verified) |
image
image
expand image

Australians need to preserve their capital, grind out alpha, favour bottom-up strategies over beta and scour the world for diversity, as potential future corrections were on the horizon, according to fixed income fund manager, PIMCO.

Whether Australians were transitioning from family owned enterprises to a diversified portfolio, or were in decumulation phase, investors needed to generate sustainable income that supported their spending habits, amid low interest rates and high volatility, the firm said.

PIMCO's managing director and head of Asia Pacific, Eric Mogelof, said capital preservation should be investors' number one priority.

"Riding a wave of unstable betas — all correlated to central bank polies — is no longer a strategy for success," he said.

Low passive returns are insufficient for both retirees and high net worth investors. So, investors could boost their returns with active management, he said.

"Moreover our secular outlook cites several additional left tail events that could increase the potential for capital losses and write downs — populist shocks like the recent ‘Brexit' vote and political gridlocks are two examples."

Higher market volatility also created opportunity and careful portfolio construction helped investors buy into undervalued assets, he said.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

GG

So shareholders lose a dividend plus have seen the erosion of value. Qantas decides to clawback remuneration from Alan ...

2 months 1 week ago
Denise Baker

This is why I left my last position. There was no interest in giving the client quality time, it was all about bumping ...

2 months 1 week ago
gonski

So the Hayne Royal Commission has left us with this. What a sad day for the financial planning industry. Clearly most ...

2 months 1 week ago

A Sydney-based financial adviser has been banned from providing financial services in the interest of consumer protection after failing to act on conduct concerns. ...

3 weeks 3 days ago

ASIC has cancelled the AFSL of a $250 million Sydney fund manager, one of two AFSL cancellations announced by the corporate regulator....

3 weeks 1 day ago

Having divested its advice business in August, AMP is undergoing restructuring in at least four other departments amid a cost simplification program....

2 weeks 5 days ago