Modest expected returns across a variety of asset classes, sub-par growth and a compressed outlook environment has left investors a challenge of how to maintain income when so many traditional sources of income are drying up.
The fact is that we are undergoing a drought of returns in the traditional “income” products. In order to discuss these, as well as other issues, Pioneer Investments will hold an exclusive due diligence meeting entitled “Embrace New Sources of Return” at the JW Marriott Marquis, Miami, on the 8th of October.
The event will provide attendees with the opportunity to listen to the outlook from several members of the investment team at Pioneer Investments, who will explore beyond the traditional asset classes, conventional asset allocation and risk management, identifying new and attractive solutions for investors who are looking for more flexibility, more sophistication and more active management.
According to the investment team at Pioneer Investments, trends which are changing the market revolve around three very important issues: ageing demographic, public debt and increased regulation.
All of these factors could jeopardize investors’ retirement and savings plans.“There is a need to consider a different way of investing that targets new sources of return, downside mitigation, and volatility management,” highlights the asset management firm.
In 1980, there were 9.8 workers at a global level for every retired person – by 2050, it is expected to drop to four workers per pensioner; and this, along with public deficits, means that in 10 to 20 years, public pension systems will encounter serious difficulties to meet the needs of its citizens.
In the past, such a scenario has led investors to run more risk yet the increase in regulation has made it harder for long-term investors to make riskier choices; and that is why the investment team at Pioneer Investments recommends the use of tools which achieve lower correlation with traditional asset classes. According to the company’s experts, this will help to maintain volatility under control and achieve higher levels of wealth accumulation over time.
To access these alternative sources of return, the industry is recording significant inflows into two types of assets: multi-asset strategies, and liquid alternative strategies.
Liquid alternative mutual funds aim to provide diversification, improve risk-adjusted returns, and may act as shock absorbers during times of market stress. They offer additional flexibility to long-only allocations as managers seek to realise opportunities from non-traditional strategies. Such flexibility allows liquid alternative strategies to seek to capture alternative sources of return while remaining relatively uncorrelated with the global equity and bond markets.
Multi-asset investments can provide different potential sources of return and a more diverse means of allocating risk than through a simple global macro strategy.
According to Pioneer, investors are increasingly inclined to invest in terms of risk-return objectives.“We believe that investors are thinking more about the risk they are willing to run and are increasingly willing to sacrifice some upside in return for better downside protection,” company sources added. Moreover, investors are adding the reliability and stability of the portfolio’s income sources to that equation , a factor that adds to the already known risk-return binomial, and the portfolio’s time horizon.
Amongst other Pioneer Investments Portfolio Managers and Market Specialists who will be attending the “Embrace New Sources of Return” event in Miami this Thursday October 8th Adam MacNulty, will be speaking about Pioneer Funds – Global Multi-Asset Target Income, and about liquid alt strategies as well, such as Pioneer Funds – Absolute Return Multi-Strategy, and Pioneer Funds – Absolute Return Multi-Strategy Growth. Thomas Swaney will also speak on Alternative Solutions – specifically, Pioneer Funds – Long / Short Opportunistic Credit.
“If you can free up some of your assets to work harder for you, if you can accurately measure your risk tolerance and if you have trust in your asset manager to be more active in your investments, then it is our opinion that you really could have the potential to generate greater returns in this environment,” concludes the firm.
For further information on this event or Pioneer Investments’ solutions please contact: US.Offshore@pioneerinvestments.com