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Investors Stay the Course Despite Geopolitical Uncertainty

Investment managers stay put on strategy despite volatility: survey

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While a majority of investment professionals believe returns will be compromised due to geopolitical uncertainties, most aren’t changing their investment strategy, according to a new survey by the Chartered Financial Analyst Institute.

The survey, which polled about 1,500 global investment professionals, found 70 per cent of respondents expect geopolitical uncertainties to affect returns over the next three to five years. Despite this, 65 per cent indicated their investment strategy horizon hasn’t changed as a result of Brexit and other political risks, while 24 per cent said it’s become more short-term focused.

“. . . It is important to remember that geopolitical risk is by no means new: apart from the 20 years following 1989 and the fall of the Berlin Wall, geopolitical risk has in fact been a constant feature of financial markets,” said Paul Smith, president and chief executive officer of the CFA Institute, in a news release.

“It is also only one of many challenges and potential drivers of change in the investment industry. In this climate, it is crucial for investment management professionals to earn the trust of investors.”

Looking at at several geopolitical developments, the survey found 67 per cent of respondents believe the election of President Donald Trump has the highest impact followed by the French presidential election this spring (10 per cent) and Britain’s plan to leave the European Union (seven per cent). Other geopolitical risks include Germany’s federal election, conflict in the Middle East and the new political relationship between the United States and Russia.

The survey also looked at how investment professionals in Britain feel about Brexit. Some 70 per cent said it’s caused Britain’s competitiveness in the global market to deteriorate. And 75 per cent of respondents from continental European countries expect their firms to reduce their British presence as a result of Brexit.

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