Things like the “myopic, short-term desire to own all things bond-proxy” or the preference for growth over value started reversing before Trump’s victory and Potter sees that continuing under the new president.
He likewise predicts that 2017 will also be another rotten year for multi-asset funds against a global background that is not “lower for longer” anymore.
“Investors continued to put their money into these products in 2016 on the expectation of reasonably good returns for lower cost and lower volatility,” Potter said. “But 2016 and 2017 are years where you want to embrace volatility, not shun it! At end of the day, people must have embraced risk to make a decent return and yet the industry seems hell bent on coming out with me-too products that avoid volatility and over-diversify into areas without a track record. That bothers me.”