Today’s tense economic and financial era requires us to revisit asset management practices. An unprecedented market climate has distorted valuations, with zero to negative interest rates spreading throughout the yield curve worldwide. This has created conditions for high volatility, stretching the risk-return profile as we know it — investors now must accept negative real returns for low risk, or much higher risks for acceptable yields.
We are navigating in unchartered waters into a crisis-prone environment. The zero-interest rate environment triggers higher protection costs and volatility, which pushes unprepared asset managers out of their comfort and performance zones. The successful manager constantly revises capital preservation and appreciation plans.
Today, assets must be continually assessed and directed toward thoroughly vetted, sustainable, value-creating propositions.