Alternative Investing

Do DGFs Diversify?

Topics - Alternative Investing Multi-Strategy

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Do DGFs Diversify?

AQR White Paper

Diversified growth funds, or DGFs, have generally met their return targets over the past five years, but they’ve too often relied on similar risk exposures as a traditional 50%/50% stock/bond portfolio to drive performance. An issue with this approach is that the next five years are unlikely to be as favorable for traditional portfolios as the last five years have been, which could be a headwind for DGF performance.

Our total return alternative strategy embraces a different approach, incorporating a far wider range of return sources – not only a more comprehensive set of market risk premia, but also alternative risk premia and alpha – with less reliance on rising prices for traditional assets.

We believe that aggressive diversification across a broad range of intuitive, empirically-tested return sources may benefit investors seeking returns that are also diversifying to the rest of their portfolios.

To request a copy of this paper, please contact us.

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The information contained herein is only as current as of the date indicated, and may be superseded by subsequent market events or for other reasons. The views and opinions expressed herein are those of the author and do not necessarily reflect the views of AQR Capital Management, LLC, its affiliates or its employees. This information is not intended to, and does not relate specifically to any investment strategy or product that AQR offers. It is being provided merely to provide a framework to assist in the implementation of an investor’s own analysis and an investor’s own view on the topic discussed herein. Past performance is not a guarantee of future results.

 

Hypothetical performance results have many inherent limitations, some of which, but not all, are described herein. Hypothetical performance results are presented for illustrative purposes only.

 

Diversification does not eliminate the risk of experiencing investment loss.

 

Certain publications may have been written prior to the author being an employee of AQR.

This material is intended for informational purposes only and should not be construed as legal or tax advice, nor is it intended to replace the advice of a qualified attorney or tax advisor.