Risk on – risk off: how managers are responding to the new paradigm

Mon Jul 2, 2012

Sentiment in financial markets appears to be increasingly rocked by political and economic events – resulting in portfolio managers putting risk on and off the table in what is seemingly a disconcerting see-saw fashion.

Not surprisingly, this well-documented "risk on/risk off" phenomena seems to be changing the way that many managers are running their funds.

One effect is a rotation between speculative and defensive investments, according to Ian Heslop, head of quantitative strategies for London-based Old Mutual Asset Management.

Heslop and his team run Old Mutual Global Equity Absolute Return Fund, and he explains: "This year and last year investors have been grappling with when to have risk on or risk off the table.

"We look at the investor sentiment and decide the strategy for our portfolio. Since the last quarter of last year, we have been rotating between speculative and defensive investments.

"We are not taking on market risk...

ISSN: 2151-1845 / CDC10004H

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