Risk Of Loss And Lower Returns

KENMAR GLOBAL INVESTMENT MANAGEMENT EXPLAINS HOW TO DEAL WITH THE RISK OF LOSS AND LOWER RETURNS

This article explores an investment that offers the potential for significant benefits when included in the portfolio of the typical pension plan, particularly when this investment is structured as an overlay programme requiring minimal funding.

Before addressing the specifics of this investment, a more general discussion of its unique characteristics is valuable. As investors have become painfully aware events that statistically should occur only infrequently have become a way of life in recent years. And in the concurrent downward force of global markets during these crisis periods, a pension fund is likely to suffer serious damage when its undercarriage scrapes the road. It needs ‘shock absorbers’. A pension fund needs an investment that can absorb the shock of a financial crisis, when everything else in the portfolio is suffering losses.

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