Allocation Spotlight
Commentary, insights and strategic perspectives for today's institutional investors
In a period of uncertainty, institutional investors are facing a myriad of challenges. The Allocation Spotlight aims to shed light on asset allocation themes that can help investors achieve their portfolio objectives.
Secondaries offer investors more than a safety valve in periods of volatility. They can help manage risk and fine-tune exposures across time, while adding differentiated return streams that are not available elsewhere.
Climate change is a real, urgent and complex problem requiring innovative solutions. The global response from policymakers, private enterprise and individuals creates opportunities for investors.
As we are currently in that time of year when many investors are setting strategy for 2023 and beyond, we are devoting the first Allocation Spotlight of 2023 to a conversation with Ash Williams, J.P. Morgan Asset Management’s Vice Chair of Asset Management.
Current yields and long-term expected returns from fixed income are more compelling than at any time in recent memory. Finding ways to capitalize on this environment will make a huge difference in reaching investment objectives.
Investing should not stop at the border. The broad opportunity set and differentiated sector exposure available in offshore markets, along with the tailwind of normalizing exchange rates, offer risk diversification and attractive alpha potential.
Diversifying a hedge strategy across multiple underlying benchmarks and allocating to the most skilled managers in each is likely to offer better risk-adjusted performance and higher alpha.
Building a shadow liquidity pool that blends liquidity, stability and return will allow investors to manage cash flows without return drag, sidestep rebalancing challenges and ultimately make it easier to achieve the return targets for which private investments were chosen.
Simple mechanical rebalancing, unless structured correctly and applied narrowly, has the potential to damage performance
As the market transitions through a phase of inflation and rising rates, investors have an opportunity to reorient their fixed income strategy while taking advantage of a far more diverse opportunity set.
The alignment of vast pools of long-term capital with environmental, social and governance principles has the potential to generate positive returns for both society and portfolios.
Combining disciplined call-writing with an active low volatility equity portfolio can provide institutional investors with a new and diversifying source of income.
Capital structure is an underutilized mechanism for generating income and the benefits real estate mezzanine debt offers investors, including attractively priced assets and superior risk diversification.
The combination of using a highly liquid ETF vehicle alongside a traditional separate account may allow for both optimal liquidity management and active alpha generation.
Opportunities to add return in a low return world may be too valuable to pass up. Investors should consider the potential use of leverage to enhance the efficiency of scarce capital.
A key question for investors today is how they should position their private equity portfolios for the next decade, given some tailwinds may soon turn into headwinds.
In seeking to protect hedge portfolios from credit downgrades and defaults, adding high quality long duration and an active high yield strategy may help make LDI programs more resilient.