The increasing value of stress-testing investment portfolios

Quintin looks at how stress-testing investment portfolios can help managers actively protect portfolio values against extreme market events and demonstrate they are working hard to protect client portfolios.

Extreme market moves can negatively impact portfolios in ways which may not be captured by conventional risk measures, making meaningfully assessing portfolio risks challenging. Portfolio stress-testing helps identify and quantify risks, helping reassure a manager how their portfolio might respond to significant market events or scenarios that reflect particular concerns.

This article forms a helpful introduction to wealth managers less familiar with portfolio stress-testing.

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Q G Rayer (2017), The increasing value of stress-testing investment portfolios, Citywire Wealth Manager, issue 384, p12, 2 February 2017.


 

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About Dr Quintin Rayer

Quintin is a Chartered Fellow of the Chartered Institute for Securities and Investments, a Chartered Wealth Manager and holds a Physics degree from Imperial College London and a Physics doctorate in atmospheric physics from Oxford University and is a Fellow of the Institute of Physics.