The economic climate may no longer be hot enough to inspire confidence or cold enough to drive intervention measures, but are the expert decisions being made in the aftermath of the so-called ‘Goldilocks’ economy ‘just right’ for meeting the changing needs of investors in the post-GFC environment?
To find out where the expert investors are putting their money, the latest AXA Investment Managers survey looked at the behaviour of 97 institutional investors and consultants. Results show market uncertainty has triggered a more dynamic approach in portfolios: 20% respondents employ a purely dynamic asset allocation (DAA) approach, and around half (53%) employ both a strategic asset allocation and dynamic asset allocation approach.
According to AXA Investment Managers Australia and New Zealand director Craig Hurt, “Investors are facing new challenges that are moving them away from purely product-based approaches and are developing an appetite for more dynamic problem solving of their multiple objectives”.
“Each client's need is unique and it requires an ability to offer multi-asset class solutions with specific risk-return profiles and the willingness to do this on a tailored basis. This certainly is a trend we've seen mirrored within our Investment Solutions business," he added.
Indeed, AXA’s research suggests that investors are realising the importance of looking at themes rather than just benchmarks in making investment decisions.
"The world we live in is far more volatile so investing according to the 'known knowns' becomes far more important as does understanding what risks we should be taking. By applying a thematic approach at both an asset allocation and equity level, investors have a relatively sensible means of investing according to the 'knowns' and preventing investment in the areas where there may potentially be problems," said Hurt.