Mercer urges trustees to diversify as risks from US-China trade war and Brexit mount
FINANCIAL services company Mercer has urged its Irish pension trustees to diversify their portfolios this year ahead of increased macroeconomic risks rising out of US politics and Chinese trade.
Mercer, which has around €25bn worth of assets under management in Ireland, also cited uncertainties around the strength of sterling, which it said was “at the mercy of Brexit”.
Its 190,000 Irish pension trustees have been told of “mounting evidence of overextension of credit” in the global economy.
Investors were warned that outstanding debt is increasing and that the quality of the debts was decreasing.
Speaking to the Sunday Independent, Mercer’s head of defined contributions, Caitriona MacGuinness, said the key theme that she was discussing with clients was in relation to safeguarding their investments.
“We believe very strongly in diversification into different asset classes as a very good way to protect your portfolio against the times ahead,” she said.
“Our approach is not to try and call markets, or not to be too clever in terms of investing but at the same time to consider the structure of the portfolios.”
MacGuinness said that in terms of the global political landscape she will not “try to call what Trump is going to do next”, but will instead try to understand the exposures to his decision-making around trade.
Mercer’s investment chief Paul Kenny said the level of uncertainty facing investors and trustees this year was “significantly higher” that it had been in previous years. Kenny also cited the imminent end of the European Central Bank’s quantitative easing programme and the likely Fed interest rate rise as challenges to investors.