More risk-taking by funds seen in 2014

AFTER missing out on a breathtaking stock-market rally in the past five years, conservative funds are under greater pressure to take greater risks, observers said. Despite having projected single-digit returns next year, equities are seen as the only game in town for inflation-beating returns in a fragile global economy and liquidity-flushed markets.

Olivier d'Assier, Asia-Pacific managing director of risk manager Axioma, told The Business Times that portfolio managers he had spoken to "have underperformed in 2012 and 2013, and can't afford to underperform again".

Portfolio managers are facing increasing pressures to do well to attract investors so their commissions will go up, he said. Otherwise, money will flow to other better-performing funds.