If fund buyers hope to achieve an 8% return, they might have to take substantial risk in today’s market. The 8% figure – 8.4%, to be precise – is what fund buyers were hopeful of achieving about a year ago when surveyed for a Natixis Investment Managers’ report.
We spoke to fund managers including Amundi and Dynamic Beta and heard that, a year on from the survey, risk and volatility in order to achieve that number might mean fund selectors would have to go substantially beyond their comfort zone.
Not everyone agreed, though. Risk might be controlled if portfolios are balanced out with lower-volatility strategies, and private capital investments could boost returns.
This creates issues for product development – for example, how to insert illiquid private capital investments into a multi-asset fund.
Ultimately, with more forecasters expecting a bear market in the next 24 months, it will be hard to achieve 8% from equities, where most portfolios are invested.
Nick Fitzpatrick is group editor at Funds Europe
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