Top money manager warns of searching for big returns

Red Warning Light

David Hunt, chief executive officer of Prudential Financial’s $1tril asset manager, said the search for 10% returns can be dangerous for investors.

“The fact that people are unrealistic is actually creating risky behavior in the way that they are putting money to work,” Hunt said Tuesday in a Bloomberg Television interview. Seeking such a yield “is wishing for a world that we don’t see enough evidence out there to bet on yet. We do think that’s what’s driving some of these risky allocations and the big shift into alternatives, which we also are worried are not going to ultimately end up generating the returns that they promised.”

Bloomberg News reports that hedge funds are facing fresh scrutiny after Warren Buffett said at his annual meeting Saturday that investors can often do better by avoiding the fees and sticking with bets that track the S&P 500 index. Hunt said in the interview that stocks have become less attractive after so many fixed-income investors switched to equities because they were frustrated with low yields on the safest bonds.

Investors would be smarter to target returns of 6% to 7%, considering the state of the economy and central bank policies to keep interest rates low to stimulate growth, Hunt said. He recommends real estate investing and said he bet on high-yield debt earlier this year in a period of market volatility.

To access the complete Bloomberg News article hit the link below:

This $1 Trillion Money Manager Warns of Hunt for Huge Returns

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