Investors say volatility is the “new normal”

A BMO Global Asset Management survey finds that 77% of Canadian investors feel that market volatility is the new normal and is here to stay for the foreseeable future.

When asked to identify their top priorities when deciding how to invest their money in the current market environment, 96% say that balancing risk in their investments is critical. Other factors included the following:

  • the long-term rate of return (95%);
  • diversification (86%); and
  • short-term rate of return (72%).

“Factors such as stretched but still reasonable equity market valuations, the withdrawal of monetary policy support and ongoing liquidity strains in emerging markets lead us to believe that volatility will continue to characterize the financial markets for the next 12 to 24 months,” says Paul Taylor, chief investment officer, fundamental equities, at BMO Global Asset Management.

Investors should be aware, he notes, that returns are likely to moderate through 2014 and that there will be further volatility in fixed income markets as the U.S. Federal Reserve’s quantitative easing tapering program unfolds throughout the rest of this year.

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