(February 21, 2014) — Russell Investments has created a handy word cloud to illustrate the main worries for pension fund investors going in to 2014.
The most prominent words in the design are those that were most frequently mentioned at a workshop held by the investment consultants in London last month.
“’Risk’ and its friend ‘volatility’ are prominent,” said David Rae, head of investment solutions for Europe, the Middle East, and Africa at Russell Investments, noting the sessions on managing funding level risk and adding long volatility exposure to portfolios. Rae ran the workshop and created the cloud with the materials used.
“It’s great to see ‘return’, ‘growth,’ and ‘opportunity’ making an appearance in the cloud and we continue to think that opportunities exist to generate positive returns in 2014,” he said, adding that he believed active management could help the nimblest investors into positive territory.
“Hedging,” “interest rates,” and “inflation” all appeared clearly in the cloud, demonstrating investors’ continued concern on these economic issues. Rae said interest rates remained low for the moment and any major catalyst for change was not immediately apparent, but investors should be aware of long-term changes in these fields.
“Liquidity” was also very noticeable in the word cloud, as investors have become increasingly aware of the need to be able to move quickly.
Notably absent from the cloud are names of specific asset classes—save equities—potentially showing investors have begun to take a more holistic approach to their portfolios.
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