Put event risk at the core of investment

TO date, the liquidity environment created by regulators and central banks following the Global Financial Crisis has been very supportive of capital markets.

But while ample liquidity continues to provide a "tame" backdrop to the investment landscape, investors must watch for trends that indicate increased risk of "tail events" - infrequently occurring events that have a large negative impact on portfolio returns.

Such events should not deter investors from staying invested. But they should put event risk at the core of portfolio strategies mindset and construction.