So what could be the cause of this discrepancy? Perhaps it’s the fact that fund selectors naturally pay more attention to managing downside risk, while it’s part of the nature of fund managers to emphasise opportunities rather than threats. As you can read in the January edition of the Expert Investor magazine, the rise of populism and the risk of protectionism pose significant challenges to investors.
Many asset managers seem to downplay the risk of protectionism, as their belief in rational thinking remains firm. However, one asset manager managed to withstand the temptation to declare 2017 the “year of growth”. For Columbia Threadneedle, political uncertainty is most to define the next 12 months.
“Overall, the continued political uncertainty could make global equity markets more volatile and the underlying fundamentals more challenging,” said Mark Burgess, global head of equities at the firm. However, Burgess believes this uncertainty “should present active investors with an opportunity to demonstrate their value. Amid rising political uncertainty, fundamental analysis and expert asset allocation will be critical in order to achieve long-term returns”, he concluded.
