Investors are urged to prepare for a new era of heightened volatility driven by a complex macroeconomic environment as well as transformative forces such as the energy transition and artificial intelligence.

While these changes are expected to add to increased complexity, BlackRock’s chief investment strategist for Asia Pacific and the Middle East, Ben Powell, said risk-averse people could struggle.

Speaking to the media on Wednesday, Powell said: “We do think things are a bit more complicated, but it’s important not to misconstrue that as saying that we should be so-called risk-takers.” That’s old-fashioned thinking.”

"Our framework is that it's different -- the macro investment market context has changed, so we absolutely think investors can and should move toward risk," Powell said.

He explained that given this increasingly complex world, everyone will need to be "much more focused" and "much more specific," especially about the type of risk they're comfortable with.

"It's not the old paradigm of a rising tide that lifts all boats — it's going to be surfing certain currents," he said.

Powell emphasized that moving forward, investors must rethink their strategies, moving away from an era of stable markets and predictable conditions, and instead be prepared to make more dynamic portfolio adjustments.

"We as investors have to go through the five stages of grieving for the Great Moderation, that wonderful period of time when volatility was lower and even though it didn't seem like it, markets went up from that period, say post-GFC all the way to COVID. Now things are more complicated," he said.

He also suggested that taking a more granular approach to selecting specific sectors and assets would benefit investors.

Volatility is now becoming more common, as evidenced by the significant sell-off in early August, which saw the Nasdaq and Dow Jones fall more than 2.5 percent, respectively. The ASX also fell 3.7%, equating to losses of more than $160 million in just two days.

“We'll see more of that [volatility] again structurally in the coming years. The market, in our estimation, accurately reflects a more confusing situation,” Powell said.

"We, as investors, have to be prepared for that, which means being a little more dynamic and more willing to act with more precision."

Stressing the importance of active management in this context, Powell warned that the days of simply taking a long position are firmly in the rearview mirror.

"[During] The great moderation, the approach to portfolios was "go long and don't touch". Now we think you're going to have to manage your portfolio a little more effectively, which means targeting risk and spotting the new wave.”