After more than a decade of equity markets steadily rising and bonds funds behaving predictably, a deluge of world shocks have altered macroeconomics, geopolitics, central bank policy and the performance of almost every asset class.
We all know the adage that ‘time in the market is better than timing the market’, and that managers must maintain long-term time horizons while ‘sticking to their knitting’.
But how much of a bearing should external, top-down shocks have on portfolio construction? Can managers successfully ignore these altogether, or has the world changed to a point where top-down positioning is unavoidable?