In its latest investment survey, actuarial firm MJW noted June was a volatile quarter for investors, encouraged by trade tensions between the US and China and the resignation of British Prime Minister Theresa May.

The actuaries said investors had been pondering how to prepare for the "next crash" almost since the lowest point of the GFC.

“Unfortunately, there are few compelling options. Defensive equities are expensive (at least relative to history), cash is yielding very low rates of return, and true alternative sectors, such as hedge funds, are costly and/or pose liquidity challenges."

Actuary Ben Trollip said while cash had a role to play in dampening volatility in portfolios, it gave no positive upside.

Bonds could also have a place, though interest rates were low compared to history.

"It's frustrating you don't get paid a running yield for having that insurance."

Hedge funds also might not give the protection they had in the past, he said.

“One of the worrying developments has been the increasing correlation of hedge funds to equity markets in recent years.”

He said he still favoured alternative assets but there were challenges with hedge funds such as liquidity and "significant" fees.

That correlation with equity markets could mean less protection from hedge funds in future.

But he said it was also possible that the correlation had occurred because only those hedge funds that had managed to match the market had remained in business.

Others that had been too defensive could have been forced out.

“Clearly, the traditional defensive asset class of global sovereign bonds remains the best diversifier. It still offers negative correlation to equities. Currency exposure (from a New Zealand investor’s point of view) is the other standout. The unhedged index has generally offered low correlation to the fully hedged index. Defensive equity sectors, such as infrastructure and property, too, are running at around 50-60% correlation to the broader equity market.”

Trollip said investors were worried about their options but some had talked themselves into a "false sense of security" given how strong markets had been in recent years.

"There's a number of people in the workforce who've had their whole careers in a post-GFC world. That's a scary thought."