Despite recent challenges, including muted returns, structural shifts, and evolving correlations, bonds retain unique diversification, planning, and return stacking potential that equity-only alternatives cannot fully replicate.
The most common question we hear from advisors is what’s the optimal stack? So we ran the optimizer — bootstrapping 10,000 simulated 25-year histories across five asset classes to find the portfolio that would have maximized return at 60/40 volatility.
Despite recent challenges, including muted returns, structural shifts, and evolving correlations, bonds retain unique diversification, planning, and return stacking potential that equity-only alternatives cannot fully replicate.
By understanding the different roles played by “immediate responders,” “delayed responders,” and “diversifiers,” and by applying innovative techniques such as return stacking, advisors can help clients navigate volatility without reducing core stock and bond allocations.
This article is written for U.S. investors – particularly those with a home equity market bias – who are concerned about underperforming international equities but still want to retain their home market tilt. We explore a capital-efficient way to hedge that risk: overlaying gold exposure on top of their domestic equity allocations.
This article explores three practical ways to implement a return stacking solution: introducing alternatives without sacrificing equities, reintroducing equity beta to an alternative-heavy portfolio, and reducing line-item risk to improve client retention.