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LGT Vestra: Why multi-asset investing?

Tuesday, May 23, 2017

LGT Vestra: Why multi-asset investing?

Arguably the biggest challenge for all investors, and in particular pension scheme trustees looking forward, is how to manage their scheme investments with "risk assets" looking increasingly expensive. Value is becoming harder to find. 

The primary reason for this outcome has been the huge amount of liquidity released by the world’s central banks in the form of "Quantative Easing" (QE). 

It is worth reminding ourselves that since 2008 and the advent of the financial crisis, it is estimated that some $13 trillion has been created by central banks to buy government and corporate bonds. 

To put this into context, this is equivalent to 70% of the annual economic output of the US. We have also seen renewed QE post-Brexit in the UK and the European Central Bank has extended its bondbuying programme until December 2017. 

Simply, what we have witnessed since 2008, has been a huge manipulation of markets causing price dislocation with negative yields making the determination of a "risk-free rate" almost obsolete.


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