Is it better to continue buying assets that look increasingly expensive (providing little or no value)? Or to leave something on the table as prices keep going up and risk missing out on further gains? In short, as markets continue to rise, the risk allocation dilemma has become an even harder problem for investors to solve.

The second half of 2017 was a very good year for equity and credit markets. It marks the tenth year of the current bull market, with phrases like “grab for yield” and “low volatility for longer” being chanted more frequently by investors. In this environment, what is the prudent thing to do for investors seeking a consistent long-term real return?

Is it better to continue buying assets that look increasingly expensive (providing little or no value)? Or to leave something on the table as prices keep going up and risk missing out on further gains? In short, as markets continue to rise, the risk allocation dilemma has become an even harder problem for investors to solve.

Here our Multi Asset Solutions team discuss how we approach the asset allocation conundrum in a world where valuations look increasingly stretched – and the ever more important need to be flexible and dynamic to achieve a real return.

Important Information
References to “we” or “us” are references to Colonial First State Global Asset Management (CFSGAM) a member of MUFG, a global financial group. CFSGAM includes a number of entities in different jurisdictions, operating in Australia as CFSGAM and as First State Investments (FSI) elsewhere. Past performance is not a reliable indicator of future performance. Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell. Reference to such securities or the names of any company are merely to explain the investment strategy and should not be construed as investment advice or a recommendation to invest in any of those companies. Neither MUFG nor any of its subsidiaries are responsible for any statement or information contained in this document. Neither the MUFG Group nor any of its subsidiaries guarantee the performance of any securities or companies mentioned herein or the repayment of capital in relation to such securities or companies. Investments in such securities are not deposits or other liabilities of the MUFG Group or its subsidiaries, and such investments are subject to investment risk, including loss of income and capital invested.