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Alternative Thinking
Total Portfolio Approach
May 19, 2026
Total portfolio approach (TPA) is a broad philosophy for institutional portfolio management that has become increasingly popular over the last few years. We explore potential benefits and risks of TPA when compared to traditional strategic asset allocation, and offer practical demonstrations of how TPA might help investors achieve their goals.
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 Jordan Brooks: Multi-Asset Strategies and Asset Allocation
March 10, 2026
In a comprehensive interview, AQR Principal Jordan Brooks outlines his thoughts on building multi-asset portfolios – including investing across a range of assets, incorporating low-correlation strategies, designing portfolios to be resilient, and more.
Alternative Thinking
2026 Capital Market Assumptions for Major Asset Classes
January 14, 2026
We update our estimates of medium-term (5- to 10-year) expected returns for major asset classes. We also include a discussion on currency risk and currency hedging, with particular considerations for U.S. and European investors.
White Paper
Bond Market Focus: Yield Curves and Mean Reverting Rate Expectations
October 7, 2025
Part 9: The yield curve largely reflects investors’ tendency to expect rates to revert toward past norms. This paper highlights how this pattern explains both the predictive power and the persistent forecasting missteps in bond markets.
White Paper
Equity Market Focus: Subjective Expected Returns
August 21, 2025
Part 7: While objective expectations are typically inferred from market prices or yields, subjective expectations are best inferred from survey data. This paper highlights interesting differences across investor groups in their tendency to overextrapolate or to be overoptimistic.
White Paper
Diversifiers Forever
July 31, 2025
In a portfolio whose investment horizon is forever, do diversifying investments add any value? In this short paper, we illustrate the surprising power of diversification for ultra-long-term investors.
White Paper
Equity Market Focus: Objective Expected Returns
July 31, 2025
Part 6: This paper reviews the strengths and weaknesses of using valuation-based metrics like CAPE and CAEY to estimate long-run equity market returns. While these models remain the most robust objective tools available, their predictive power is nuanced and often overstated.
White Paper
Equity Market Focus: Interrogating the Historical Data
July 10, 2025
Part 5: We discuss how historical average returns can be useful estimates of future expected returns (only) if expected returns are constant and the sample is unbiased.
White Paper
How Did We Get Here? A Brief History of Expected Returns Formation
June 20, 2025
Part 4: We present our history of expectation formation: How have investors formed long-run return expectations over time, and how have academics perceived that investors do it, or ought to do it?