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Alternative Thinking

Can Machines Time Markets? The Virtue of Complexity in Return Prediction

Common wisdom has suggested that small, simple models are best suited for market timing applications, given finance’s “small data” constraint and naturally low predictability. However, we show that complex models better identify true nonlinear relationships and therefore produce better market timing strategy performance. We validate this "virtue of complexity" result in three practical market timing applications.

White Paper

A Fresh Look at Multi-Strategy Alternatives

In this short piece, we review the case for multi-strategy alternatives, explaining why liquid, diversifying alternative strategies may have a decisive role to play in the tougher investment environment ahead.

Alternative Thinking

2024 Capital Market Assumptions for Major Asset Classes

We update our estimates of medium-term (5- to 10-year) expected returns for major asset classes. We also include a section on estimating expected returns and risk for private credit, as well as a feature on the key decisions that underpin any capital market assumptions framework.

Key Design Choices in Long/Short Equity

Investors are looking for resilient sources of return in the face of mounting headwinds for equity markets. Long/short and market-neutral equity strategies deserve consideration. We review the case for allocating to long/short equity and address several key choices faced by investors and by managers.

Alternative Thinking

Honey, the Fed Shrunk the Equity Premium

What are the implications of higher interest rates for asset allocation? This article reviews historical patterns and forward-looking expected returns for a range of asset classes, and highlights the role of “cash-plus” liquid alternatives — overlooked beneficiaries of higher cash rates. We show that in a higher-rate world that investors haven’t seen for many years, diversification away from equities may prove to be especially valuable.

Alternative Thinking

Key Design Choices When Building a Risk-Mitigating Portfolio

After 2022 showed the downside of traditional portfolios’ reliance on equity risk, many investors have recently begun to reconsider the role of risk-mitigating portfolios within their broader asset allocations. We show why we believe trend following deserves a prominent place in any serious risk-mitigation portfolio.

Quick Takes

Emerging Equities

 

Hear our quick take on emerging equities, where we’ll cover why – and why now – investors should consider re-visiting their allocations to this asset class.

Quick Takes

Trend Following in Alternative Markets

 

What is alternative trend following? We summarize what a trend following approach is, how it can be applied to alternative markets, and why alternative trend following approaches have historically outperformed during difficult periods for traditional asset classes.

Quick Takes

Top Three Investment Ideas to Consider for 2023

 

Watch a Quick Take on our Portfolio Solutions Group’s top three investment ideas for 2023. 

Alternative Thinking

2023 Capital Market Assumptions for Major Asset Classes

We update our estimates of medium-term (5- to 10-year) expected returns for major asset classes. We also include two special topics: one highlighting the case for emerging market equities, and the other assessing the impact of large interest rate rises on various risk premia.