Low risk levels point at post-crisis norm

Graph downRisk levels in equity markets declined for the fifth quarter in a row in the first three months of the year, despite the Cyprus crisis, the United State debt talks and weak job growth in the developed world. Data provider Axioma also says correlations between assets fell to five-plus year lows during the quarter, an indication that markets have returned to relative stability after years of crisis. “From a risk perspective, the current investment landscape is substantially different from the crisis-driven markets that resulted from the global and European financial crises,” says Melissa Brown, senior director, applied research at Axioma. “With markets no longer in lockstep, equity investment managers and asset owners should see increased investment opportunities for active returns.” It was not all good news. Axioma's risk forecasts for China, Japan and Australia rose. China's forecast now exceeds that of the crisis-hit European countries, while the FTSE Japan has become one of the riskiest benchmarks the firm covers. However, Brown says she believes current risk levels, which are close to historically levels, are sustainable for a while yet, as low volatility and a lack of alternatives continue to drive investors to the stock market. “US sequestration, panic in Cyprus, weak job growth in Europe and the US – none of it had much impact on risk in the first quarter,” she says. “Once again, we detected no definitive undercurrents pointing to an imminent reversal of the current risk regime.” ©2013 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.