The Intelligent Allocator: diversification's 'free lunch' still needs a cook
The Intelligent Allocator: diversification's 'free lunch' still needs a cook
Michael Strobaek
Global CIO Private Bank
Clément Dumur
Portfolio Manager
key takeaways.
- Portfolio diversification may be perceived as investing's 'free lunch', but its benefits depend on financial assets continuing to behave differently from one another
- A balanced portfolio seeks to improve investor outcomes not by maximising returns but by limiting losses and shortening recovery periods
- Asset correlations, market regimes and hidden concentrations change over time, meaning diversification cannot be taken for granted and needs to be continuously monitored
- Active asset allocation helps preserve diversification’s benefits by adapting portfolios to evolving risks, opportunities and an investor’s objectives.
What is the value of portfolio diversification? We examine how changing asset class correlations, market regimes and hidden concentration means diversification needs to be…
What diversification really buys
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It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a marketing communication.
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