Most investors are only too aware that they need financial objectives when putting portfolios together, but many forget to take their age into account.
The chairman of the world’s biggest money manager, Blackrock, says the issue of people living for longer needs to be a major consideration when determining what investment portfolios should be returning.
Laurence Fink says the aging population of the West will have a huge long-term impact on investing and it’s an issue no-one is really considering.
“We don’t really appreciate what this means because investors are preoccupied with headlines of the day but it will become a greater problem which needs addressing soon as retirement needs increase,” he said.
He believes that not only will investors have to save more to fund longer retirements, but they will also have to review sharing the risk within a portfolio, particularly for equities.
Looking for US boost
Like many other professional advisors Mr Fink is looking to the US to bring the best returns from a growing economy and he predicts that the banks will start lending to small and medium-sized business again which will boost employment levels.
The US housing market is also a strong area for investment, Mr Fink believes, and he says that since house prices collapsed there have been huge amounts of unsold properties available, but prices are now going up which can only be good for the economy.
He also tips the energy sector, which will see the US become energy independent in the next few years – with cheap gas prices helping to fuel an economic boom.
Meanwhile, asset manager says investors are missing exciting opportunities offered by the world’s emerging economies.
Baring Asset Management has a MENA (Middle East and North Africa) fund which has returned 20.8% since launching in March 2010.
Investment challenge
The firm says that Saudi Arabia and United Arab Emirates are presenting the most attractive opportunities and they, along with several other countries, look set to enjoy high economic growth rates.
Barings points to the widespread investment in infrastructure by governments in the region and a rapidly growing middle class spending on consumer goods for helping to fuel opportunities.
The issue for investors, says Barings, is that not many funds are following the region and this could bring dividends for fund managers and investors alike who could add significant value to their portfolios.
Dr Ghadir Abu Leil-Cooper manages the MENA Fund, and she said: “Since launching the fund we have seen changes in the region including the Arab Spring.
“This may appear to be a challenging investment environment but with careful navigation we have managed to outperform the benchmark index.”
