Investor 'risk aversion needle' continues to rise

Since the start of the year, the investor risk aversion needle, led by equity market indicators, has moved to heightened levels, says Hermes Investment Management's Geir Lode.

As risk aversion in the market grows, we start to see investors moving into risk-off assets including gold, bonds and large-cap equities. At times like this, we often see a market pullback as sentiment sharply switches and short-term market influencers flock to the scene to pick up some swift bargains. We saw this happen towards the end of the summer as investors flocked towards the 'safe havens' of high-quality large-cap stocks, regardless of the price. We have seen companies with quality factors of good corporate governance and balance sheet strength performing strongly. Quality ten...