The debt crisis is forcing investors of all stripes to reassess their goals, according to the 2013 Principal Global Investors/CREATE-Research report entitled Investing in a Debt-Fuelled World. The report reveals that high returns are no longer the be-all and end-all of investment goals. Investors will increasingly distinguish between “product alpha” and “solutions alpha.” The first is about beating the markets and the second about meeting investors’ predefined needs.
This shift from wants to needs will be the most enduring legacy of the 2008 crash. It will also remain the key driver of innovation over the rest of this decade, as ageing populations ensure that 75% of retail assets are held by retirees or near-retirees over the next five years. Hence, new asset-allocation and risk-management tools will continue to emerge in three core investor segments:
- Defined benefit (DB) plan,
- Defined contribution (DC) plans
- Mass market investors. Read more