Since 2016, the traditional flow of money into safe assets has turned into a flood.
In order to understand why, you need to go back to 2009, where investors began adopting a “safety first” approach with regards to their portfolios.
This cautious approach was exacerbated by the trending down of interest rates towards zero, which provoked new fears that growth would never return and productivity would never recover.
Combine the above with the increasingly unstable post-2016 geopolitical environment, and we’re in a situation where allocations to “safe” assets are much higher than before. While this may seem sensible, as this piece by Orbis Investments explains, there’s a trade-off.
If you read this Orbis Investments’ article, you will learn:
- which stocks have been driving index returns
- concerns in bond markets
- the dichotomy between an asset perceived as safe and potentially unstable business fundamentals
The opinions expressed in this content are those of the author shown, and do not necessarily represent those of No More Practice Education Pty Ltd or its related entities. All content is intended for a professional financial adviser audience only and does not constitute financial advice. To view our full terms and conditions, click here
