With-Profits Portfolio Optimization at a Time of Heightened Uncertainty
01 July 2020
As governments across the world race to protect the economy following the global spread of Covid-19, equity markets have recovered part of their losses. The future, however, has never been so opaque. Investors are focusing their efforts into mitigating risk in the short term, and for the longer term trying to understand what the possible future economic scenarios could be and how best to position themselves
Analyzing different economic scenarios, including ‘’low for longer’’ and “low forever” scenarios, has rarely been more crucial for institutional investors. This is the case in particular for pension funds and insurance companies holding long-dated liabilities on their balance sheets.
Read more about understanding your choices to protect your capital position and policyholders’ future bonuses in our whitepaper.
Why stocks could be in the red this year and what to do about it
It hasn’t been since 2000 and 2001 that U.S. stock markets lost money in two consecutive years, but it’s something that could potentially happen again this year. Ortec’s modelling is pointing to negative equity returns over the next 12 months as the most likely market scenario. Pension funds with tactical or dynamic allocations at their disposal may want to temper their risk and consider fixed income instead.
Ortec Finance discusses with Responsible Investor on why high-quality climate data is essential for investors to map progress toward emission reduction goals and enable a successful transition to net-zero.