In this article, Brian Parker looks at why geopolitical risks are front of mind for many investors right now. News headlines and television coverage are truly frightening. In particular, hopes that the Arab spring would lead to a flowering of secular democracy across the Middle East, which were always optimistic, now look appallingly naïve. And yet, from the behaviour of the world’s financial markets, we could be forgiven for thinking that investors operate in a kind of parallel universe: markets just don’t seem too concerned by the global ructions.
Investment managers often find geopolitical risks difficult to manage – while history is some help in modelling and analysing their impact, every crisis is different and unpredictable. At MLC, our investment approach includes geopolitical crises among the wide range of possible scenarios, both favourable and unfavourable, that we consider when determining our portfolios’ asset allocations.
You can read the full Investment Insight 2014 August here.
by Brian Parker
Head of Portfolio Specialists