Patrick Morris Featured in Hedge Funds Review's Article: "Market Uncertainty and Volatility Influences Investor Risk Appetite"

We must not forget that return is a function of risk. Heading into 2008, many lost sight of this basic truth. Now as we recover from 2008 and 2009, the mood heading into 2010 is radically different. Many of the largest investors in the US and Europe are liability-driven – pension funds, retirement plans, endowments, foundations. Although they may not use the classic liability-driven investing approach, they do have liabilities they must fund. These investors who are 100% funded will be very risk-averse, choosing equity market neutral, global macro, currency and commodity strategies targeting low volatility. The underfunded investor or plan will have to balance two discordant themes: the need to preserve capital and the need for high rates of return. These investors will be forced to allocate into low-volatility strategies to protect against declines in their fixed-income portfolios but are also likely to seek high returns in distressed debt, distressed real estate, commodities and emerging markets. Given the large number of underfunded investors, the general risk appetite will be surprisingly high in 2010.

Quote from Hedge Funds Review Article: "Market Uncertainty and Volatility Influences Investor Risk Appetite" January 2010 Issue