Where can asset allocators turn in turbulent times?

ON ASSET ALLOCATION

The third quarter has proven to be a challenging period for all investors, asset allocators included.

Volatility has risen abruptly, safe haven assets such as government bonds offer poor value and widely-favoured structural trades – emerging market currencies, for example – have come under severe pressure. US government bonds have been an unexpected winner, despite the debt ceiling fiasco and subsequent S&P rating downgrade. Despite being the epicentre of current fears, the euro has remained remarkably resilient against a number of currencies with better ‘fundamentals’ such as the Norwegian kroner, Australian dollar or Korean won. Policy risk has also been at the forefront, EU announceme...