Return Stacking aims to help investors unlock the benefits of diversification by using their capital more efficiently and effectively.
At its core, Return Stacking is the idea of layering one investment return on top of another, achieving more than $1.00 of exposure for each $1.00 invested.
This allows investors to maintain their core stock and bond exposure while simultaneously introducing new, diversifying return streams.
For decades, sophisticated institutional investors have thoughtfully applied leverage to include diversifying alternative strategies without diluting their core stock and bond allocations. Due to the complexity of managing derivatives, small institutions, financial advisors, and individuals have largely been locked out of this approach.
Today, professionally managed mutual fund and exchange-traded products allow investors to implement this concept. We are developing the research, product design, and portfolio construction that unlocks this opportunity for everyone.
Investors can introduce diversifying assets and strategies without sacrificing exposure to their traditional asset allocation.
By introducing additional sources of return, Return Stacking creates the potential for outperformance, which may be particularly attractive in an environment where expected returns for traditional assets may be muted.
By thoughtfully introducing differentiated return streams, investors may gain a diversification advantage with the potential to reduce portfolio volatility and drawdowns.
