January edition of Portfolio Construction: Expanding the Toolkit
Stock and bond markets have rallied significantly since 2009 when central banks cut interest rates to zero and increased the money supply through quantitative easing programs. More than 10 years later, most of this stimulus is still in place. Traditional balanced portfolios consisting of publicly traded equity and fixed income securities have worked well in recent decades, but our view is that they are not expected to provide similar returns in the future. Active asset allocation and a new, modern approach to portfolio construction are needed. Portfolios should be thoughtfully constructed to achieve a structurally better risk-return outcome. One way to achieve this is to complement traditional actively managed equity and fixed-income investments with alternative strategies. Read More.