New paper advocates a rebalancing approach to investment
LONDON (8 April 2020) – Aon, a leading global professional services firm providing a broad range of risk, retirement and health solutions, has issued a new paper, ‘Rebalancing - Ignore the Crowd… Follow Your Policy’ which focuses on the dilemma currently facing pension schemes as they confront the challenge of an investment bear market.
This new paper looks at how schemes can and should react in the face of market falls by focusing on a long-term policy and sticking to their investment convictions. It also looks at the legacy of past bear markets and how they have been best ridden out.
Daniel Peters, partner at Aon, said:
“There is much that can distract investors in stressed markets, not least the behavioural financing of the crowd. When the momentum of the stock market appears to be one way – down – it’s hard for anyone to step back and assess what really is the best course of action – or inaction – for their scheme.
“Our analysis of historical experience, leads us to advocate an approach of disciplined rebalancing, enabling investors to stay focused on a long-term investment policy. Timing markets is never straightforward and can be costly – nevertheless we firmly believe that disciplined rebalancing adds value.”
Daniel Peters continued:
“We are all too aware that these are tough times but there are ways that schemes can hold firm to their investment beliefs, explore opportunity allocations and use medium-term views to guide the way in rebalancing their portfolio until calmer markets return.”
‘Rebalancing - Ignore the Crowd… Follow Your Policy’ is available here
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