In 2020, diversification has faced two challenges. One being a growing undercurrent of dissatisfaction among asset owners whose allocations to a range of alternatives haven’t translated into better performance; the other being the failure of many strategies that were marketed under the premise of providing “uncorrelated returns streams” to deliver protection during the COVID crisis. We advocate renewed commitment to diversification while confronting challenges in generating diversification that can withstand severe market stress. We examine key reasons why many popular diversifying approaches and strategies improve portfolio optics more so than economics. We outline a holistic approach to multi-asset portfolio formation designed to make use of expansive information and opportunity sets in order to produce more durable diversification, and we provide examples that are relevant to both asset allocation and strategy selection.
Re-examining Diversification presented by:
Seth Weingram, Ph.D. – SVP, Director, Client Advisory
Seth heads Acadian’s Client Advisory function, which is closely aligned with both the Investment and the Global Client teams. Prior to joining Acadian in 2014, Seth was a managing director in Equity Derivatives Trading at UBS. Seth holds a Ph.D. in economics from Stanford University and a B.A. in economics from the University of Chicago.
Ram Thirukkonda, CFA – VP, Senior Investment Strategist, Client Advisory
Ram joined Acadian in 2018 and is a senior investment strategist on the Client Advisory team. Prior to joining Acadian, Ram was a quantitative research analyst on the Asset Allocation team at GMO LLC. Ram holds an M.S. in financial engineering from MIT; an M.S. in transportation engineering/operations research from MIT; and a B.Tech. in civil engineering from Indian Institute of Technology, India. He is a CFA charterholder and a member of CFA Society Boston.
Markets have been wracked by uncertainty amid the spread of COVID-19. Here, our macro team provides their latest thoughts on how global equity, bond, volatility, currency, and commodity markets are reacting to this unfolding crisis and what we believe it means for investors going forward.
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