Altius senior portfolio manager Chris Dickman said index funds and funds following the benchmark were more likely to be affected.
“If risk does re-price, and you’d expect it will, there may be large capital losses across all asset classes,” said Mr Dickman.
The fall in prices in emerging markets in May 2013 was a strong example of the phenomenon, he added.
According to Mr Dickman, when Federal Reserve chairman Ben Bernanke announced in May that the US central bank was considering a reduction in quantitative easing, there was a significant number of investors retreating from these markets since they considered the assets to be riskier.
The US Treasury will have to approach the issue of re-pricing carefully as it continues to shift away from unconventional monetary policy, he said.
Altius Asset Management believes while lower quality assets performed well in 2013, this is less likely to be the case this year.
Mr Dickman said funds that are benchmark unaware, absolute return-focused and diversified across different asset classes are more likely to achieve higher returns, despite any re-pricing occurring.
