There is nothing like the aftermath of a double financial crisis to motivate stakeholders to rethink models, concepts and strategies in investments, especially when there are signs that the next crisis could very well be triggered by the finance industry itself (see more here).
Dark clouds are building up on the horizon, indicative of the excessive risks taken by private financial institutions in an environment that does not promise the appropriate economic growth.
The EU regulators have not stood still, however. In a Single Market that did not conceive, by default, the concept of financial crisis (simply because the Maastricht Treaty - along with the subsequent reforms, Amsterdam, Nice and Lisbon – laid down the foundations of the EMU, but not a single provision on crisis resolution), the EU Institutions have attempted to put an adequate financial regulatory and supervisory framework in place. Whereas much can still be done to improve this framework, the thorough revision of EU financial regulations has put in place an EU safety net, even though this won’t prevent another crisis,.
But, instead of fixing problems, why not prevent them? Some key players are advising for more sound strategies in banking and investments with advocates calling for evidence-based investing, Robo-consulting or sustainable finance…Yet others propose to ‘think long-term in order to deal with short-term challenges’.
Patrick Thomson of JPM Asset Management invites institutional investors to set sail for the horizon, guided by long-term objectives, rather than seek the nearest calm water. He points to ‘modest economic growth’, ‘elevated valuations’ and ‘rising volatilities’ as factors influencing future investment performances, proposing risk spreading through diversification of portfolios and innovation.
The article also warns about negative performances for pensions funds, which have to make up for both present and future liabilities. This view is further supported by BETTER FINANCE research pointing to poor net returns generated by pension funds in the span of the last 17 years, with some countries even recording negative real returns.
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