The Changing Investment LandscapeBy: Richard Gordon, Vice President and General Manager, Fund Management Posted:
Much has changed since the start of this year as COVID-19 has negatively impacted many traditional asset classes. For most of this year, investors have spent their time rebalancing portfolios, redeeming investments with current managers, anxiously waiting for the market to correct itself and simply trying to develop an investment strategy to earn an attractive rate of return.
In times like these the traditional asset classes tend to display more volatility as investors flee to safer investments such as Government bonds and other risk-free investments. Whenever an economic crisis occurs, there are increased discussions relating to portfolio diversification and further minimizing downside risk amidst a recession.
Although traditional asset classes have proven to provide solid returns to investors over the medium to long term, non-traditional asset classes have also historically provided equally solid returns and are forming a greater part of investors’ portfolios. This is partly due to non-traditional asset classes being more accessible to investors with the appropriate risk profile and criteria, through the creation of investment vehicles and structured products. Examples of non-traditional investments include Private Equity Funds, Venture Capital Funds, High Yield Funds, and Real Estate Funds which in particular have become more popular and attractive during these periods. Not only do these non-traditional asset classes provide attractive returns to investors but also some amount of downside protection due to their low correlation with traditional asset classes during periods of economic downturn.
The creation of more of these types of structures is not a paradigm shift but an acceleration of the global shift towards allowing for the widest range of investment opportunities thus facilitating faster wealth creation for all investors.
As market dynamics change so must we, as we adapt quickly to the ever-changing investment landscape through creative and innovative products to match the changing needs of our clients. Learn more