Investment managers must take lessons from the credit crunch to their portfolios, Collins Stewart’s global strategist told a wealth management conference in Guernsey this week.
Modern portfolio theory failed prior to the crisis because it did not account for the fact that at times of extra stress risk levels rise and correlations are not constant, according to Robert Jukes, a strategist who works with portfolio managers and stockbrokers at Collins Stewart Wealth Management.
“The volatility of combined portfolios was more than expected and drawdowns were larger than expected,” he said. “The problem must be tackled head on with models for better diversified portfolios, with risk analysis right in the heart of the process, which will take us through most of the world’s crises.”
Collins Stewart’s first wealth management conference in Guernsey also discussed normal recovery in an abnormal world, the dangers of investing long-only in bond markets, fund selection and blending, and the complexities of investing in hedge funds.
The conference was targeted at private clients, trust companies and various intermediaries who work with wealth management firms, such as lawyers and accountants.
“We were extremely pleased with the turnout of about 100 people,” said Paul Meader, Collins Stewart’s head of portfolio management in Guernsey. “It gave us the opportunity to demonstrate to delegates our latest thoughts on the current investment climate.”
Collins Stewart Wealth Management is the largest local investment company in the Channel Islands, advising on total assets of GBP6.7bn through offices in London, Guernsey, Jersey, the Isle of Man and Geneva.
