Fund buyers are confident their return targets are achievable despite market volatility, though asset price swings concern them, research shows.
Nearly 80% of 200 professional fund buyers surveyed said their average return target of 8.4% in 2018 was realistically achievable as they developed investment strategies to confront the market environment.
But they were split on the impact of volatility on their portfolios, with 39% saying they saw rising levels as a threat, while 38% anticipated a positive effect on portfolio performance.
Matthew Shafer, head of global wholesale at Natixis Investment Managers, which carried out the survey, said the split in opinion could be interpreted in two ways.
“The downside opinion is likely built on the view that after a long period of steady growth, we are due for a correction that will bring security prices back down to earth,” he said.
“However, on the upside, increasing volatility could signal higher return dispersions and greater potential to generate alpha.”
The most popular strategy for managing risk was sector diversification, followed by risk budgeting and using more alternative investments.
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