Allocation Spotlight
Commentary, insights and strategic perspectives for today's institutional investors
In a low return environment, 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.
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.
Amid volatile markets, the capacity of timber to deliver steady returns with low volatility can improve portfolio efficiency while offering resiliency in the face of inflation and rising rates
While the TWR for open-end funds is often about half the level of the IRR for closed-end funds, the multiples for both over a ten-year horizon are roughly the same.
As investors balance the need to take more risk in an environment of lower returns, tactical asset allocation strategies can increase returns, reduce risk concentrations and preserve valuable liquidity.
Leveraging the transparency and liquidity of the public markets, REITs provide dynamic diversification across sectors and geographies, and incorporate flexibility within portfolios to move across the capital structure.
Making use of capital efficient inflation swaps in lieu of TIPS offers direct exposure to realized CPI inflation, positive real returns and risk, along with high liquidity that will allow for opportunistic rebalancing down the line.
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.
Developing and implementing an ETF program may seem daunting, but the process—which makes use of common investment mechanisms—is relatively straightforward.
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.
