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Survey says geopolitical risk not likely to fade

Geopolitical risk, while not new to investors in an increasingly volatile world, is seen as a potential depressant on asset prices in coming years, especially as populist politics gain hold around the globe.

Seven of 10 (67%) investment pros say they expect “investment returns to be compromised” over the next three to five years by uncertainty tied to global politics, a survey of more than 1,400 investment pros conducted last month by CFA Institute, a global association of investors, found.

The bulk of the uncertainty centers around President Trump, who took office in January. Some 67% of respondents cited Trump’s election as the “political risk with the biggest impact on investment strategy.” Other top risks cited: the 2017 French elections (10%), which could result in a victory for anti-euro populist candidate Marine Le Pen; and fallout from the UK’s exit from the European Union (6%).

Post-Brexit, nearly six out of 10 (59%) respondents feel further exits from the EU are likely, up nearly 10% since the CFA’s last poll in July. Britain is expected this month to trigger Article 50, which officially declares its intent to leave the EU. What’s more, the percentage of investors that think EU disintegration is likely has risen to 36%, up from 21% in July.

“Geopolitical risk is by no means new,” said Paul Smith, president and CEO of CFA Institute. “It’s one of many challenges and potential drivers of change in the investment industry.”