Why we are planning for a low-return environment

VIEWPOINT

Investment is a stop-start business these days. Western markets have a good few months, then plunge on talk of crisis.

You can get a whole year like 2010 when returns are modest but positive, only to be followed by a year like 2011 when many managers lost money with share markets going down again. We have long held the view that returns from Western economies are going to be disappointing for several years. The only way around is if you are brilliant at spotting the short, sharp rallies and getting out for the rest of the time. No-one can guarantee to do that. There are several reasons why returns could be lower than in the last century. The West is still heavily over-borrowed, and has to cut its debt...