GLOBAL - Fund managers have sharply conflicting views on how the current downturn will play out, Hewitt Associates says.
It said these differing views were likely to represent more potential for confusion among trustees seeking to make changes to their asset allocation.
And it said more than 40% of fund managers surveyed felt that the combination of an extreme financial crisis and greater inter-connection between markets and asset classes had "negatively impacted the rationale for diversification in the short term".
Hewitt UK head of investment consulting Andrew Tunningley said: "The dislocation in financial markets has raised many questions for trustees pursuing diversified investment strategies, not least around the need for greater flexibility in asset allocation.
"More than ever before, real world experience, depth of market and client insight and conviction will be the difference between those who sink or swim."
Hewitt Associates principal consultant John Belgrove added: "The current crisis shows us once again that markets are not efficient and that active judgement has an important role to play.
"Portfolio diversification is, however, a proven mainstay allowing investors to access a higher return for the same level of risk or the same return at a lower level of risk."
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