New Normal Investing

Asset Management NewNormalInvesting: Isthe(Fat)TailWaggingYourPortfolio? April202 WHITEPAPER ExecutiveSummary The 2008 crisis has undoubtedly reshaped the global financial landscape, compelling investors to adapt to a unexampled normal1 environment, characterized by anemic economic growth, rising unemployment and low worry rates in many developed countries. This aberrant confederacy has created many newfound challenges for institutional investors, but two corroborate out for their high degree of intricacy and complexity: the showcase for yield, and the need to better manageand account forfat-tail events. YogiThambiah Managing Director, Head of investiture Strategy Americas CIO Office, Credit Suisse Asset Management We have indite extensively about these issues in previous papers,2 and have emphasise that, in our view, there is no one-size-fits-all solution to these problems. Instead, we intrust that investors should consider substitute(a) techniquessuch as increasing exposure to real assets, re-designing relocation of their fixed income portfolio and modifying risk frameworksthat can potentially mitigate the prejudicial impacts of the new normal on their portfolios.

In this paper, we extend our preventive of how investors can modify their risk framework to adjust for the new normal by providing a deeper dive into fat-tail risk. First, we define what we satisfy are key drivers of the new-normal environment, and assess the market impact on different asset classes. Then, we discuss how incorporating higher moments3 (i.e., skew and kurtosis) of a return distribu tion has become increasingly important, as ! accomplished measures of risk based on mean-variance optimization have failed to to the amply characterize return behavior. Then, we propose alternative investment approaches that we moot can minimize risk from fat tails, and are credibly to be more effective in todays environment, including: ? ? ? The selection of strategies that, when blended with traditional beta,...If you want to get a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper