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Key Design Choices in Long/Short Equity
December 5, 2023
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.
White Paper
Driving with the Rear-View Mirror
December 5, 2023
U.S. equities enjoyed a banner past decade. To analyze what assumptions investors need to have about the next ten years to expect a repeat performance, we decompose U.S. equity market excess-of-cash returns into four components – dividend yield, real earnings growth, multiple expansion, and the real return on cash.
Alternative Thinking
Honey, the Fed Shrunk the Equity Premium
September 5, 2023
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.
White Paper
Rethinking DC Portfolio Diversification
August 25, 2023
We make the case for an allocation to liquid alternatives as a viable and versatile complement to existing DC portfolios.
Quick Takes
Asset Allocation in a Higher Rate World
August 10, 2023
Does a higher cash rate tide lift all asset boats? Or are some asset classes more attractive than others? In this Quick Take, we look at the implications for asset allocation in a higher rate world.
Alternative Thinking
Key Design Choices When Building a Risk-Mitigating Portfolio
June 12, 2023
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.
Journal Article
International Diversification—Still Not Crazy after All These Years
May 3, 2023
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
March 28, 2023
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.
Perspective
Holding Our Breadth
February 6, 2023
Regular readers probably noticed I’ve been talking a lot about value lately. While I’m all for shining the spotlight onto the value dislocation, my colleagues also continue to produce a great breadth of research worth adding to your non-value-reading-list. I preview some of my recent favorites.
Journal Article
Investing in Interesting Times
January 31, 2023
Given 2022’s cheapening of asset valuations, some have questioned if we are still in a world of low expected returns. We review what’s changed after 2022, showing that the lower expected return picture has not been substantially altered for many asset classes. We provide some suggestions to potentially ameliorate the pain caused by this environment.