This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

SSgA Report Highlights Continued Concerns About Tail Risk Events Among Institutional Investors

New research commissioned by State Street Global Advisors (SSgA), the asset management business of State Street Corporation (NYSE: STT), and written by the Economist Intelligence Unit (EIU), reveals that 71 percent of institutional investors believe it is “highly likely” or “likely” that significant tail risk event will occur in the next 12 months.

Many investors, hit hard by the substantial drawdowns of recent tail events, are much more wary about the course of the next tail risk event. The research shows that the crisis in the Eurozone, the prospect of global or European recession and the slow-down in China among the concerns.

SSgA commissioned the EIU to survey 310 institutional investors from across Western Europe and the US in June and July of this year. The findings are incorporated into a new report entitled “Managing Investments in Volatile Markets: How Institutional Investors are Guarding Against Tail Risk Events,” which reveals that although tail risk events are by definition unpredictable, investors have become far more sensitive to them, and are taking more proactive steps to reduce the impact they have on their investments.

A tail risk, or extreme shock to financial markets, is technically defined as an investment that moves more than three standard deviations from the mean of a normal distribution of investment returns. Only 20 percent of respondents are “very confident” that they have some form of downside protection in place for the next significant event, with a further 61 percent “somewhat confident” of this. However, 73 percent of institutional investors believe that due to changes in their strategic asset allocation, they are better prepared for the next major tail risk event than they were before the start of the financial crisis.

Niall O’Leary, managing director and head of EMEA portfolio strategy at State Street Global Advisors, said, “The report’s findings show that tail risk events are nearly always underestimated, but that given the occurrence of a number of these events in recent years, sensitivity amongst institutional investors to them has increased. However, the research also shows that the benefits of diversification as a tail risk mitigation approach are unclear and investors are not entirely confident that they are sufficiently protected from the next event. Adoption of tail-risk mitigation strategies has been slow, although a large majority of investors now see managing this issue as an integral part of a comprehensive investment plan.”

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.07 -0.18%
FB $117.84 0.02%
GOOG $703.51 0.30%
TSLA $212.90 0.65%
YHOO $37.01 0.19%


Chart of I:DJI
DOW 17,653.80 -6.91 -0.04%
S&P 500 2,046.74 -3.89 -0.19%
NASDAQ 4,701.8720 -15.2220 -0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs