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Perspective
A Positive Stock-Bond Correlation Is a Terrible Reason to Add More Equity Risk to Your Portfolio
April 8, 2026
As the correlation between stocks and bonds has turned positive, many investors have questioned whether bonds still provide meaningful diversification and have looked to alternative "replacements." This perspective argues that most popular substitutes add more equity risk, not less, and shows that true diversification still requires strategies with genuinely low or negative equity beta—not simply abandoning bonds.
Journal Article
An Interview with Cliff Asness: The Illusion of Safety in Private Assets
March 31, 2026
In an interview with the editor of The Journal of Private Markets Investing, Cliff Asness reiterates his views on the numerous flaws embedded in private assets, and what investors should keep in mind when assessing the role of privates in their own portfolios.
Perspective
I Did Not Predict What Is Going on in Privates
March 25, 2026
I push back on claims that I predicted recent turmoil in private markets, clarifying that my prior work focused on long‑term issues like volatility mismeasurement, illiquidity, and expected returns—not short‑term market calls. While privates play a real economic role, I argue investors shouldn’t confuse smoothed valuations and perceived stability with lower risk or superior long‑run performance.
Perspective
There Ain’t No Such Thing as a Free Lunch
August 11, 2025
Our latest piece on Buffer Funds appears in the current issue of the Journal of Portfolio Management. Once again, and with more analysis (and co-authors) than our two previous posts on the topic, we find these products don’t hold up to scrutiny, either empirically or theoretically. Buffer funds by and large have sold investors the promise of comfort, cloaked in complexity, at the cost of risk-adjusted returns. Our paper shows there are simpler, less expensive, and more effective ways to deal with the risk of equity markets.
Journal Article
Rebuffed: An Empirical Review of Buffer Funds
August 11, 2025
Equity investing is hard: volatility can be high, returns are unpredictable, and drawdowns can be painful. “Defined outcome” strategies such as buffer funds are the latest in a decades-long lineage of products promising equity-like returns with less downside risk. Like their predecessors, a closer look at these strategies reveals they fall short both empirically and theoretically.
Perspective
(So) What If You Miss the Market’s N Best Days?
June 5, 2025
This post revisits and refutes a long-standing argument against market timing—that missing just a few of the market’s best days can devastate returns—by demonstrating its logical flaws and statistical irrelevance. Using both historical and out-of-sample data, it shows that the risks and rewards of market timing are more symmetric than commonly portrayed.
Perspective
Buffer Madness
May 8, 2025
Last month, we posted a short piece critical of options-based strategies such as “defined outcome funds” and “buffered ETFs”. It showed that the vast majority of them failed to deliver either better returns or less-severe drawdowns than a simple combination of passive equities + cash. Since then, we’ve gotten quite a bit of—let’s call it—feedback. My partner Dan, who wrote the original, now writes the devastating response to his predictable critics. My only criticism is he is too kind.
Perspective
Antti Is (Still) Trying to Understand Return Expectations
April 28, 2025
My partner, Antti Ilmanen, is launching a new series, Understanding Return Expectations. The series focuses on how investors actually form their own beliefs about expected returns (which may, or may not, correspond with what he finds reasonable!).
Perspective
Should Hedge Funds Hedge?: Why Some Alts Should Have a Beta of 1.0
March 28, 2025
While uncorrelated alternatives can be beneficial, they often fail to significantly impact the overall portfolio. Here, I argue that adding beta to these alternatives can enhance capital efficiency and improve long-term returns. Ultimately, there is a need for a balanced approach to investing in alternatives, including a combination of aggressive and equitized strategies.
Perspective
Rebuffed: A Closer Look at Options-Based Strategies
March 21, 2025
Options-based strategies, often labeled with words like “Buffered,” “Overlay,” and “Defined Outcome” have amassed a sizeable chunk of investors’ money, lured by the promise of market-like returns with less risk. These strategies use options to capture the upside or downside of an asset’s returns, and managers who employ a mix of options can tailor an asset’s risk/return profile to align with an investor’s goals. But can they actually deliver?