Risk assets around the world experienced chronic volatility throughout 2015, which appears to be spilling over to 2016. Given a host of factors, we do not expect this volatility to subside anytime soon.
The current environment, in our view, warrants focusing on return efficiency and allocating to low volatility strategies designed to maximize risk-adjusted returns. These strategies include long and short positions in equities, credit and currencies; the opportunistic pairing of long and short positions to isolate risks and defray carrying costs; and protective measures for sovereign debt exposure.
For a deeper dive into why we believe pursuing such strategies may help investors mitigate downside risks, smooth return profiles, increase portfolio efficiency and potentially achieve better risk-adjusted returns, read our paper Navigating Volatility in Pursuit of Efficient Returns.
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Mutual funds are subject to market risk and volatility. Shares may gain or lose value.
Under certain conditions, long positions and/or short positions may be subject to a decline in market value which may result in substantial losses. Equities are subject to market risk and volatility; they may gain or lose value. Loans may be collateralized or uncollateralized and are subject to credit, interest rate, prepayment and liquidity risk. Currency investments may be volatile and involve additional expenses and special risks¬¬¬, including fluctuations, foreign taxes, regulatory and geopolitical risks. Sovereign debt instruments are subject to the risk that a government entity may be unable to pay interest or repay principal on its debt. Diversification does not guarantee profit or protect against loss.
These views represent the opinions of OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the publication date, and are subject to change based on subsequent developments.