Equities, bonds and things: How can investors deal with their problem of increasing liabilities in a low-return, multi-asset world?
Liabilities — particularly unfunded liabilities — will keep any institutional investor awake at night, but sensible long-term planning and effective asset allocation is the path of the righteous and prudent investor.
Things have not been easy of late, however. Six years of global recession have changed the landscape to such an extent that navigation is more difficult; the old landmarks have either shifted or disappeared altogether. The 21st century witnessed emerging markets as the engine of growth, but the global financial crisis has left no economy untouched, or unharmed.
The International Monetary Fund’s January 2014 World Economic Outlook Update indicates emerging and developing markets are expected to achieve around 5.1 percent GDP growth in 2014 and 5.4 percent growth in 2015. Brazil delivered only 2.3 percent GDP growth in 2013 and Russia 1.5 perce