Multi-Assets Global Adaptive Allocation
Bridge the gap between low yields and high expected returns
After decades of falling interest rates, investors are faced with a low yield environment, which increases the gap between their performance target and the expected return of their investment strategies. Historical performance numbers will not likely be repeatable over the next ten years, whereas the portfolio risk will persist.
We tackle this challenge with a systematic and flexible approach, which we call “Global Adaptive Allocation”. The importance of a flexible multi-asset portfolio is based on the following three convictions:
- Exploiting a large multi-asset investment universe is key to navigating in both stormy and sunny weather.
- Mitigating the drawdowns is the most important driver of long-term performance.
- An adaptive approach results in superior returns in the long run.
“It is not the strongest of the species that survives, (…). It is the one that is most adaptable to change.” - Charles Darwin
Our Global Adaptive Allocation can be broken down into three steps: First, a disciplined analysis of the economic cycle built on market fundamentals (macro- and microeconomic data), which incorporates both participants’ rational expectations and behavioural biases (i.e. sentiment indicators). This analysis shows us in which market phase (early, mid, late or recession) we are currently in. Second, we adapt the allocation to risk factors, such as equities, duration and credit, to the current market phase. Third, on a discretionary basis, we take advantage of specific medium-term opportunities within a large global multi-asset universe.
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