FoFs face allocation challenges

Kelly explained that there has been a lot of inflation in asset prices in the last year as investors piled into speculative positions and markets and took advantage of interest rate differentials, particularly the Japanese ‘carry trade’. This has made all types of assets more expensive said Kelly, as well as encouraging more and more people to build risk into their portfolios by investing in emerging markets funds. Kelly said: “Markets have done well because of economic activity and also because an inflation in liquidity. However, the amount of liquidity has peaked and is now drainin...