IFIA: CEO roundtable – more genuine alpha products need to be developed

Fri Sep 14, 2012

More investment products need to be developed that actually achieve an absolute return, according to Jeffrey Sargent from bond specialist asset manager Pimco.

The executive vice-president Pimco Europe told the Irish Funds Industry Association earlier this week during  a CEO roundtable that, prior to the financial crisis, much of the product available had been traditional benchmark-based investments – where asset managers would try to produce alpha in excess of whatever the benchmark was.

He said: "Unfortunately, over an extended period of time, not only [did] benchmarks produce negative returns but often the alpha component [of the fund] was also producing negative returns.

"So this has created a great deal of fear and risk aversion in the marketplace and caused investors to rethink [whether] they have the tolerance for the type of volatility and extended period of below-expectation returns to get through a crisis-style event.

"We have then seen much broader...

ISSN: 2151-1845 / CDC10004H

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