What changes will diversified growth funds have to make to succeed in a new market environment?


Over the past decade, diversified growth funds (DGFs) have broadly delivered on their promise of equity-like returns with low volatility against a backdrop of strong performance in low-risk assets. Today, there are signs that market drivers are in transition and assets will behave differently in the future.

The traditional risk / return trade-off appears to be reasserting itself, and recent performance in equities has highlighted the opportunity costs of avoiding volatility.

For institutional investors, selecting a DGF will require an assessment of whether the underlying strategy is sufficiently dynamic to perform in a new environment.

The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested.

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