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Journal Article

International Diversification—Still Not Crazy after All These Years

International diversification has hurt US-based investors for over 30 years, but the long-run case for it remains relevant. We show that both financial theory and common sense favor international diversification, buttressed by empirical supportive evidence. Additionally we show it would be dangerous to extrapolate the post-1990 outperformance of US equities.

White Paper

Re-Emerging Equities

The expected premium for investing in emerging versus developed equity markets is on the upper end of its past 25-year range. At the same time, many of the risks historically associated with emerging markets have secularly declined. We believe there is a strong case for investors to “re-up” their emerging allocations.

Journal Article

Tail Risk Hedging: Contrasting Put and Trend Strategies

The sharp market fall and speedy recovery during the eventful first half of 2020 has kept tail risk hedging topical: investors have both fresh memories of a painful loss and renewed fears of a repeat. We try to offer a balanced overview of the strengths and weaknesses of direct and indirect tail hedging strategies.

Journal Article

Portfolio Protection? It’s a Long (Term) Story…

Investors have a natural urge to protect their portfolios from sudden crashes, even though bad outcomes that unfold over longer periods are more detrimental to reaching long-term goals. We show risk-mitigating and diversifying strategies have added value more consistently than options-based hedging over the more important, longer drawdowns.

White Paper

Chasing Your Own Tail (Risk), Revisited

As investors turn to addressing the risk of a severely declining market, we summarize five approaches to building a more resilient portfolio.

DC Solutions Series: Defensive Equity, Part 2

In part two of this two-part series, we focus on the implementation of a defensive equity strategy within the context of a DC retirement plan.

Journal Article

Embracing Downside Risk

This paper shows that downside risk tends to be the main source of long-run returns in equities and other asset classes, and argues that long-term investors may be better off embracing downside risk in certain cases.

Journal Article

Superstar Investors

Many famous investors are outspoken about their investment philosophies and use them selectively. We seek to apply their wisdom systematically to determine whether their philosophies, if applied broadly, might still generate “alpha.”

DC Solutions Series: Defensive Equity, Part 1

In part one of this two-part series, we focus on the intuition behind defensive equity and present evidence for its efficacy as part of an effective defined contribution retirement plan.

Journal Article

Working Your Tail Off: Active Strategies vs. Direct Hedging

Economic theory and empirical evidence support the idea that investors should, over the long term, be compensated for bearing risk.