Political events have caused some concern for fund managers, with Square Mile Investment Consulting and Research adjusting portfolios to protect against the potential outcomes.
Jason Broomer, head of investment at the firm, said so much quantitative easing over the past seven years had "made the rich richer" but not helped the average man on the street.
Therefore, he said political risk, with a string of elections coming up - especially in Europe - poses some element of threat to portfolios as people vote for change.
According to Mr Broomer, it was right to rebalance portfolios in the light of this political risk.
He said: "We removed European equity exposure from our portfolios toward the end of December last year.
It is only going to take one of these elections to go wrong and it will really set the cat among the pigeons in the eurozone."We felt the political risks inside of Europe in 2017 were not being correctly priced by markets and so we switched into the US."
Mr Broomer commented on the ongoing election cycle in Europe, with the Italian referendum in December last year "voting for change", and people "wanting the pot stirred" - a situation that has been already evidenced with Brexit in the UK and the election of President Donald Trump in the US.
"It is only going to take one of these elections to go wrong and it will really set the cat among the pigeons in the eurozone", he added.
"We do not think this is likely to happen. It is low probability, but it would be a high impact event."
For this reason, with markets not really reflecting fully the impact of political risk inside market valuations, Mr Broomer said it is best to take risk off the table.
He explained some elements of economic concern have already started to be evident in the eurozone.
Mr Broomer said: "As the year has gone on, we have seen sovereign spreads inside the eurozone widen. We've seen Italian and other peripheral bond spreads widen compared with German bunds and we have seen European equities underperform relative to the US."
Moreover, he said the prospect of a potentially anti-Euro political party coming to power within the eurozone would be a significant "issues within the European community" and, in the short-term, would be a "disruptive occurrence".
According to Mr Broomer, advisers have been "delighted" with the trade that Square Mile has done to rebalance portfolios against political risk in the eurozone.
He said: "We do not expect to make money from this trade; we consider it to be a precautionary move to protect clients' capital, and this resonates well with advisers as they know how important this is for their underlying clients."
simoney.kyriakou@ft.com
