But there is always a price to pay – low volatility means that when there are high performing markets, the upside will be missed, so it’s not just a question of developing low-vol products, but a whole suite of funds based on an absolute return benchmark.
Hullo is keen to offer versions of his core products with absolute return benchmarks. Does that mean launching long-short funds, or more flexible long-only ones?
“It can be both,” he says. “On the long-only side, you can have high conviction products with high tracking error. And maybe long/short 120/20 could be of interest as well.”
All change
So there is the short-term switching between major equity markets; the medium-term move out of fixed income; the long-term switch from benchmark to absolute return investing; and there is one more horizon that Hullo considers important.
“I think the biggest challenge to my clients will come over the next 25 years. Investors need to change their funding for their retirement now because what will probably be delivered when they retire won’t be enough to make sure they can live well.”
The expected lower performance of all investment strategies will require a change in mindset among everyone in the industry.
“What we need to think about is how we can provide adequate products for these retirement needs,” he says.
So whatever time scale you consider, there is going to be a constant driving need for adaptation: for product providers, for end investors and of course for the investment professionals who guide them.
