'Targeting volatility can leave you behind the curve on asset allocation'

‘Targeting volatility can leave you behind the curve'

Lawrence Cook, head of business development at Thesis Asset Management, tells Alice Rigby why he is less positive than some on frontier markets, how wealth managers' understanding of risk is evolving, and why volatility targeting is a dangerous game to play.

Which asset classes have been most successful for you in 2014? In terms of managing risk, we have been pleased with our exposure to property. It has delivered the kind of yield equivalent to that provided by fixed income in previous years. We have been maintaining or building our portfolios’ property exposure. In fixed income, if we had stayed in longer duration debt and sovereigns for longer, of course we would have seen rewards. However, despite interest rate expectations being pushed out further to possibly the end of next year, given the current nature of risk we are pleased to...