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Addressing Challenges with Solutions

Investments Experts
Video Interview

challenge-2-davide-cataldo
  • Davide Cataldo - Head of Multi Strategy Portfolio Management, Head of Investments Italy
  • Fabio Di Giansante - Head of Long/Short European Equity
  • Andreas Koenig - Head of Foreign Exchange Europe

Overview

Geopolitical events, possible monetary policy mistakes and long-term economic risks such as debt and Emerging Market transition are all possible volatility fertilisers that could materialise in the future.

 

The apparently low volatility environment we are currently experiencing is a false indicator of safety. In our view, the primary concern for the future will not just be the likely rise in volatility from the current low level but, most importantly, the possibility of rapid and violent corrections in the market (tail risk events).

 

In the low return environment that we foresee, time to recovery in the event of a drawdown will get longer and, consequently, investor goals and time horizons become paramount.

 

Outcome-oriented solutions aligned to investor goals and time horizons, and with limited correlation to traditional asset classes, could help to effectively diversify investor portfolios and limit the drawdowns in an era when tail risk is becoming more frequent. For investors it is time to rethink diversification and drawdown management to be prepared for the unexpected.