Investments under the Global Economic Policy UncertaintyA Literature Review

The literature review examines the impact of global economic policy uncertainty (EPU) on various investment strategies. The increasing EPU, driven by uncertain events such as the Covid-19 pandemic, trade war, and regional conflicts creates a more complex environment for investors. This paper reviews a series of academic papers exploring how the EPU affects traditional investment methods such as stocks bonds and mutual funds, as well as some new investment strategies environmental social and governance (ESG) investing. Findings indicate that the EPU increases stock market volatility and improves the risk premium for bonds. Mutual funds show reduced inflows and increased management activities during the period of high EPU. In contrast, ESG investment becomes more stable under the EPU. By comparing the different performances of different strategies across different markets, the review aims to provide investors with strategies to mitigate risk and maximize returns. The insights gained from the paper could help investors and policymakers find more powerful methods to withstand the challenges and promote the development of the social economy.