Financial Standard Chief Economists Forum: Lower and slower here to stay

5 February 2016

It’s never been a more exciting time to be a chief economist. So quipped one of Australia’s leading economists, Saul Eslake, at this week’s Financial Standard Chief Economists Forum – where Honner hosted a table.

Certainly, there are some pretty fascinating market trends unfolding both domestically and globally, that are keeping investors and chief economists alike, watching, waiting and anticipating just what will happen next.

From negative interest rates in Europe and Japan, to rising rates in the USA. From the global crash in oil prices to the transformation of the local economy away from mining – not to mention the wild start to the year we’ve seen for the ASX. As pointed out at the Forum, the global economy is proving an intriguing beast. (Bob Bauer, Chief Global Economist at Principal Global Investors referred to it as a global ‘rebalancing and redistribution of growth’).

With this dynamism comes the concern for managing investment portfolios, and securing returns without unnecessary risk, in a world characterised by slow growth and volatility.

As pointed out  by Kevin Anderson, Head of Investments, Asia Pacific Region at State Street Global Advisers, average balanced super fund returns have fallen from 16.3% in 2013 to just 5.4% in 2015. And the prognosis is 2016 is likely to deliver even weaker results.

The challenge for all investors in 2016, whether institutional or retail, will be just how to secure decent risk adjusted returns and identify opportunities for above-market growth.

At Honner, we expect this to be a major theme across the media this year and we are looking forward to hearing – and sharing – our clients’ thoughts and insights on achieving positive investment outcomes in a low-growth, volatile market.

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