Referring to the uncertainty of financial markets, MLC’s Gosling said anticipating what might go wrong was key to achieving one’s investment objectives.

“No one can predict the future, the best we can do is to map uncertainty,” she said.

“We should value risk control as much as we value returns and one of the problems with this industry is that we don’t.”

Having tested a strategic overlay on its Long Term Absolute Return Portfolio (LTAR), which aims to protect the portfolio against potential losses when risks are high, Gosling said the overlay was now available across all of MLC’s diversified strategies. The LTAR overlay resulted in a 30 per cent underweight to growth assets in July 2008.

Gosling said equities offered opportunity, adding that with risk potential high in bond markets, “being too defensive could actually increase your risk exposure”.