Peter Stanyer - The Economist guide to investment strategy: how to understand markets, risk, rewards and behaviour

THE FINANCIAL CRISIS OF 200709 has had enormous consequences, but it has not led to major changes in the investment policies followed by institutional and private investors. One trend that has been accelerated by the crisis, and its aftermath of ultra-low interest rates, is the rapid move in various countries towards complete closure of company-sponsored salary-related pension schemes. Millions are now confronted with the challenge of building up their own pension pot to fund their retirement. Many of these, who, it is reasonable to suppose, have no particular interest in investment markets, need to be conscious of whether their savings are sufficient and on track, and sensibly invested. This new edition is deliberately tilted to address these kinds of concerns of the private investor (see on personal pensions, in particular).

Many of these concerns parallel those facing institutional funds. Since the crisis, earlier investment trends have been extended, rather than new trends emerging. There has been a growing recognition by all types of investors of the importance of globally diversified equity portfolios ().

Twenty-five years ago, both authors would have been confident that investment manager fees would have been under relentless pressure in the decades ahead. Time has so far shown such a prediction to have been only half-right. However, even the most modest investor can now find easy access to reputable low-fee strategies of equity and bond investments that might suit their needs and which are comparable to those discussed in the first part of the book. Norways oil fund (formally known as the Government Pension Fund (Global)), which is reported to be the largest fund in the world, has essentially followed such a strategy, since 1997. Warren Buffet, who has a reputation as one of the most successful professional investors, suggested in 2017 that American investors who are saving for retirement should consistently buy an S&P500 low-cost index fund I think its the thing that makes the most sense practically all of the time.

As very low interest rates have persisted, stockmarkets have seemingly become more expensive. Bond markets automatically translate low interest rates, which are expected to persist, into much higher bond prices and it is widely believed that this helps to explain the buoyancy of prices for a wide range of collectibles, from works of art to classic cars (see ).