Investors can’t afford to ignore China risk: Kotkin

NYCBERS analyzed the last two decades of developed and emerging international allocations in our equity portfolio. The result suggests that historic assumed/projected returns, volatility, and correlation were not even close to being accurate. The historic assumptions led to a 15% allocation to Ex-US developed markets and emerging markets. Performance disappointed on all measures. As we approach a new asset-liability analysis and asset allocation, the question is what assumptions are reasonable for Ex-US developed and emerging markets, both absolute and relative, and what is it that impacted returns in international markets to create such deviation from expectations and relative performance? What did we, and our consultants get wrong? Also, if you believe in mean reversion what is the expectation for mean, and what will drive international markets to outperform the US (the historic assumption)?
Are we failing to account for Geopolitical risk or autocracy risk?