Hope on long-term horizon

It is probably true to say there are three basic risks that apply to most asset classes advisers must always consider when making a recommendation - namely inflation, interest rates and foreign exchanges rates. Added to these, increasingly, are commodity prices.

Do investors look for asset classes uncorrelated or unaffected by these risks? That is virtually impossible, although some product providers would correctly claim investments such as life settlements, wine, stamps or classic cars are not affected by any of these risks. It is questionable, but an increasing number of these assets classes – if that is even a correct expression – are being bundled together within unregulated collective investment schemes. Some of these schemes have considerable investment merit, others do not, and advisers should avoid them even with clients’ desire for ...