There is an often-repeated saying in the asset management industry that states ‘diversification is the only free lunch’, but the question is whether this adage will hold up in the coming years. There are many investors who feel that the current market conditions could result in a very different relationship between equities and bonds going forward and this sparks the question of how to mitigate equity drawdowns.
Correlations have become more obscure in the brew of low yields, lenient monetary policy, the search for yield in real assets and high valuations in equity markets. In this scenario, the proper implementation of a chosen investment approach becomes even more important. At the [i3] Equities & Equity Alternatives Forum 2018 we will look at what this means for the construction of equity portfolios and their immediate alternatives.
We will discuss the following topics:
- Factor investing appeals to many investors because it promises market outperformance at low fees, but how do you implement a framework that doesn’t give away the small premium through poor execution? And how do you ensure you are not just chasing noise?
- What is the future for active managers in a world that has embraced passive and rules-based strategies en masse?
Managing equities in-house can be a more efficient way of executing your strategy, but how do you manage the risks associated that comes with this?
- Hedge funds and hedge fund-like strategies can help in identifying regime changes and mitigating drawdowns, but what if everyone adopts the same strategies? Are we merely creating more volatility?
- Should we make greater efforts in finding original ideas? Is the diversification of the future not one of asset classes but one of minds?
- Can we leverage ESG as a tool to identify future growth sectors?