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White Paper

Seeking Resilient Growth: Why It’s Time for the LGPS to Consider Liquid Alternatives

November 1, 2024 - Thomas Maloney Elliott Coleman

Most Local Government Pension Scheme (LGPS) investment portfolios rely on substantial equity allocations to drive growth over the long term, but heroic rates of earnings growth would be needed to maintain recent strong equity performance. While LGPS have been turning to private assets to seek future returns and diversification, we make the case for truly diversifying liquid alternatives as a viable and versatile complement to existing portfolios, and explore the benefits of a transparent, quantitative approach.

Alternative Thinking

Broad Strategic Asset Allocation

September 18, 2024 - Portfolio Solutions Group

This paper presents one justifiable set of inputs and finds that alternatives earn themselves a sizable strategic allocation. Investors are encouraged to compare these results with their own assumptions, constraints and allocations as they look to build a resilient portfolio for long-term investment success.

White Paper

An August of Discontent

September 5, 2024 - Jordan Brooks Jonathan Fader

We cover why investors should not shrug off the August market reversal as a blip. In an environment of continued macroeconomic uncertainty, episodes of volatility will likely persist. We discuss the importance of building a well-diversified portfolio that is resilient to a wide range of future economic scenarios.

White Paper

Is Your Equity Hedge Fund Portfolio Resilient Enough for Uncertain Times?

February 6, 2024 - Michele L. Aghassi Chris Doheny Charles Fattouche Erik Wong

We analyze the historical macroeconomic sensitivity of traditional asset classes and major hedge fund strategies. We show that the average hedge fund is unlikely to provide meaningful diversification during periods of macro uncertainty, which are also typically difficult for traditional assets. However, long/short low-risk strategies have tended to exhibit low macro sensitivity.

Alternative Thinking

2024 Capital Market Assumptions for Major Asset Classes

January 16, 2024 - Portfolio Solutions Group

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

December 5, 2023 - Portfolio Solutions Group

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 - Jordan Brooks

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 - Portfolio Solutions Group

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 - Elliott Coleman Thomas Maloney

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.