Volatility hurts investors' retirement savings: Natixis
NEW YORK |
NEW YORK (Reuters) - Volatile markets make saving for retirement more daunting for investors who either through habit or fear of the unknown are not adapting to a changing investment landscape, a top executive of Natixis, a large asset management firm, said on Wednesday.
Four out of five U.S. investors worry that they will not be able to meet their retirement-income goals, said John Hailer, CEO of the Americas and Asia of Natixis Global Asset Management, in Boston.
"The sad part is that most individual investors sat out the market rally this year," Hailer told reporters at a briefing.
"It is not how you are allocating your investments anymore," he added. "It is how are you allocating your risk and how are you going to manage it, going forward."
Investors need to learn new strategies for asset allocation and diversification to cope with their fears, Natixis money managers said.
On the horizon for 2013 is the potential for some good news for the global economy, said one leading fixed-income portfolio manager, who also spoke at the briefing.
David Rolley, portfolio manager of Loomis Sayles & Co., in Boston, told reporters he believes market uncertainty should decrease by March of next year, and once that happens, there is an "excellent" chance of re-acceleration in capital spending in the United States.
Corporations have huge cash balances on their books, but they are reluctant to spend because of the uncertainty over the U.S. presidential election and the looming fiscal cliff - the year-end expiration of tax breaks created under President George W. Bush and austere spending cuts - that will go into effect if Congress fails to take action to shrink the deficits.
The energy sector, the housing market, automobiles and durable goods are industries that are likely to offer returns, as well as those companies that pay dividends on their stocks, Rolley said. Fixed-income investments will be pressured until next year, he added.
"We are not taking a lot of duration risk in the long end because we think there is a bear market three to six months away. We are not taking much risk in the front end because there is no income, so we are holding a lot of mid-curve securities - three- to 10-year paper," Rolley said.
Rolley said he preferred corporate credit to government debt, and he noted there was a case for emerging market local currency paper.
However, given the progress that the U.S. market has made during the Federal Reserve's third quantitative easing program, money managers expect abated returns ahead.
China has been the largest buyer of commodities, but as the Chinese government engineers a soft landing, Jerry Chafkin, chief executive of AlphaSimplex Group, of Cambridge, Massachusetts, said there will be no acceleration in commodity prices as seen in the past.
"Investors can expect much more modest asset appreciation going forward," Chafkin said. "The returns that investors are going to get are less than expectations, and perhaps less than they need for their retirement."
(Reporting by Daniel Bases and Manuela Badawy; Editing by Jan Paschal)
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