Rethink investment objective and risk tolerance, urges Mercer chief investment strategist

TODAY’S macroeconomic environment marks a distinct departure from the investment backdrop of the past 10 to 15 years, and investors would do well to revisit their objectives and risk tolerance, says Rich Nuzum, Mercer’s executive director (investments) and global chief investment strategist.

There are more than a couple of departures from what investors have been accustomed to in the past decade or two: One, the traditional 60/40 portfolio comprising 60 per cent bonds and 40 per cent equities has failed to provide diversification benefits. Two, it remains uncertain where fixed income yields would settle, as the Federal Reserve is not done in its battle to quell inflation.

Buying on dips, which has worked in past downturns, has also proved disastrous this year.