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Ask the Experts: Time to manage volatility in 2017


James Norman, President, QS Investors
Legg Mason Global Asset Management

1) What is your view of 2017?
- 2017 will be a challenging year, with pockets of great opportunities
- Since global financial crisis, there were attractive returns in the equities and fixed income space but going forward, it will be challenging market
- At this point, valuations have been higher than they have been in the past
- For fixed income: Interest rates are low which means potential for strong capital appreciation is low and volatility might be much higher
- For equities: there are attractive opportunities in terms of economic numbers which should drive corporate profits higher, but at this point valuation for equites are still high
- Hence, there are a lot of risk accompanied with these opportunities

2) Tell us about the concept of managed volatility?
- Managed volatility is a strategy developed to anticipate drawdowns (political and macroeconomic risks etc.) in the market
- 3 characteristics for this strategy: 1) companies with low beta and low volatility 2) Companies with more sound financial health, with cash flow to support dividends 3) Companies with sound fundamentals which are attractively valued as compared to their peers

3) Why should investors include the managed volatility strategy into their portfolio?
- Very important to allocate to these strategies right now as there is an opportunity for upside potentials and also risk in the market place that might cause drawdowns
- So the strategy can mitigate volatility of the overall portfolio and also lose less money in the market

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Broadcast Date 03 February 2017
Video Duration 00:06:40
Programme Ask the Experts: Time to manage volatility in 2017
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