More than three-quarters (77%) of Canadian investors say market volatility is the new normal for the foreseeable future, according to a study by BMO Global Asset Management.
When asked to identify top priorities when deciding how to invest in the current market environment, almost all (96%) said balancing risk in their investments is critical. Other factors include:
- Long-term rate of return (95%)
- Diversification (86%)
- Short-term rate of return (72%)
“Factors such as stretched but still reasonable equity market valuations, the withdrawal of monetary policy support and ongoing liquidity strains in emerging markets lead us to believe that volatility will continue to characterize the financial markets for the next 12 to 24 months,” says Paul Taylor, chief investment officer, Fundamental Equities at BMO Global Asset Management.
Read: How to define volatility
Taylor notes investors should be aware that returns are likely to moderate through 2014 and there will be further volatility in fixed-income markets as the Fed’s QE tapering program unfolds through the rest of this year.
The study also examined if investors feel that they require help with selecting investments given current market conditions:
- 80% said they could use assistance finding their ideal investment risk level.
- 85% reported needing help finding investments well suited for their risk level.
Not surprisingly, given these findings, 86% stated that they would use an investment portfolio designed specifically to maximize returns for their given risk level.
|Region||% who feel that market volatility is the new normal and here to stay||% who feel that balancing risk is an important investment factor||% who say they could use help finding their ideal investment risk level||% who say they could use help finding investments well suited for their risk level||% who say they would use an investment portfolio designed specifically to maximize returns for their given risk level|