Shane Oliver, AMP - The concept of risk on/risk off refers to the way markets behave during heightened macroeconomic threats

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Shane Oliver, AMP - The concept of risk on/risk off refers to the way markets behave during heightened macroeconomic threats. Whenever there is a macroeconomic threat, investors get nervous and sell-off growth assets such as shares, the Australian dollar, commodities and corporate debt, whereas defensives like bonds would rally. There were high correlations between these assets which would normally not move so closely together. However, over the last 6-12months that concept seems to be breaking down as individual assets have been reflecting their underlying fundamentals. This could bring important diversification benefits when setting up a portfolio. (VIEW LINK)


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