Strategies for Effective Allocation
Portfolio Construction Insights and Divergent Thinking
If risk-optimised allocations are the destination, we at least need to boost our suspension for the journey, and maybe change our form of transport altogether. Read on for a challenge to conventional thinking, and research on?a range of investment strategies.
These are strange times for economies and markets. Man Group challenges eight investment principles, the breakdown of which may be about to make investors jobs even harder.
For compliance reasons, this paper is only accessible in certain geographies
Strategic and tactical asset allocation guidance based on a study of historical data between 1976 – 2021, with insight on the asset groups best placed to hedge inflation risk.
Dr. Wouter Keller’s ‘Bold Asset Allocation’ (BAA) strategy is backtested, finding that both aggressive and balanced flavours beat a 60/40 benchmark over the period studied.
The authors suggest there could be great benefit from allocating to strategies that reduce equity correlation, and why sometimes traditional diversification methods can fall short.
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Whilst long volatility strategies offer diversification benefits, they do have barriers to entry. Could tactical asset allocation strategies for equities be used as an alternative?
Realising the benefits of diversification requires careful portfolio construction, to avoid diversification in name only. Wilshire analyses how alternatives could play their part.
This analysis suggests that a 60/40 portfolio’s long-run results will be determined by the equity market, and that the buy and hold vs trend-following bond choice is largely moot.
SPECIAL REPORT
For compliance reasons, this paper is only accessible in the United States & Canada
This year investors have had to bear the brunt of significant repricing in both equity and fixed income markets. What opportunities could there be in fixed income going forward?
ABOUT THE AUTHOR
Andrew Perrins is a former Actuary and Asset Allocator. After qualifying as an Actuary, he worked for 15 years in investment management, serving as Director of Asset Allocation for Abbey Life and for Chase Manhattan, before setting out on a more entrepreneurial path.
To contact him,?email?[email protected]