Private banks braced for higher volatility
Wealth managers are expecting higher volatility in 2017 and believe portfolio diversification is the best way to mitigate it
More than 50 per cent of respondents to PWM's Global Asset Tracker expect volatility to be high during 2017, while 40 per cent believe it will be medium, and only 11 per cent expect it to be low (see Fig 1).
“Volatility will rise as a function of increased political news flow, and intermittent concerns about global central banks stance,” says Katie Nixon, CIO, Wealth Management at Northern Trust.
“Investors have to look through that short-term volatility, look through the noise and not be swayed and urged to act based on a tweet or a front page headline,” she says. And staying invested is important in order to benefit from those few best days in the year that tend to get a lump of the whole year returns.
Portfolio diversification is the portfolio management techniques used most to mitigate market volatility, followed by currency hedging and active tactical asset allocation (see Fig 2).
The latter, together with higher investments in private markets, is also believed important in generating higher returns.
PWM's annual Global Asset Tracker survey is based on interviews with chief investment officers, heads of asset allocation and chief investment strategists of 38 selected, mainly global and regional, private banks. Together they manage more than $7.8tn in client assets globally. For the full results click here.
