total assets: When you look into 2016, the one thing very clear is there are more fat tail risks out there than we’ve seen for a long time, said Paul O’Connor, co-head of multi-asset at Henderson Global Investors in London, according to Euro News. Across most Henderson funds, cash levels as a percentage of total assets are in the mid-teens, he said. However, with markets volatile and assets from developed market equities to emerging market bonds a sea of red, the unusually high number of geopolitical risks stalking investors this year could expose already bruised portfolios to further losses. A fat tail risk refers to the higher-than-normal likelihood of an otherwise unusual event that would lead to extreme movements in returns, technically more than three standard deviations from the mean. Crucially, tail risks are growing at a time when global growth concerns and recent market dislocation have made investors crowd into a small number of trades, notably long U.S. dollar, short oil and emerging market positions. Current key risks include the UK leaving the euro zone, South China Sea tensions, Middle East conflicts, falling oil prices, the European refugee crisis and a highly uncertain U.S. Presidential race.
(news.financializer.com). As
reported in the news.
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