In the Post Covid-19 Era Investment Risk Must Come Before Return

The words “investment risk” often evoke an ardour for sophisticated statistical models. Indeed, statistical risk models do, and should, form an integral part of a kaleidoscope of interlocking tools for sustainable investment management. To use a very apt analogy for the current state of the coronavirus pandemic, statistical risk models are like blood tests to diagnose what ails or could ail investment outcomes. These models often rely heavily on the rear-view mirror perspective to diagnose the present and predict the future. However, we believe that the real cause of poor investment results that is often observed through statistical diagnostics is a forward-looking “disease” called “fundamental risk”.

To continue reading download PDF below