What is all-weather?
An all-weather approach is an asset allocation methodology that diversifies across geographic regions, asset classes, and investment styles. The goal of this multi-layered diversification is to shield investors from the pitfalls of concentrated investing by relying on thoughtful preparation rather than unreliable predictions.
- Endowment style multi-asset and multi-strategy diversification
- Decades of proven resiliency across varied economic environments
- Disciplined rebalancing between uncorrelated, independent assets
Why is an all-weather approach important now?
The current economic environment has the potential to expose portfolios to a wide range of market scenarios. Over concentration and limited diversification can unnecessarily endanger investors to downside risks during adverse environments.
THREAT OF SEVERE OR PROLONGED EQUITY MARKET DECLINES
An all-weather approach is designed to target high single digit returns and has the potential for better downside management during periods of severe or prolonged equity market declines.
POTENTIAL FOR INFLATIONARY PERIODS LIKE THE 1910s, 1940s, and 1970s
Increased exposure to asset classes not found in a typical portfolio, such as commodities and currencies, is designed to help investors prepare for potential inflationary periods like the 1910s, 1940s, and 1970s.
NEGATIVE REAL RETURNS FROM BONDS DUE TO LOW INTEREST RATES
Investors may experience negative real returns from bonds. An all-weather approach can complement and even replace bonds as a potential risk reducer for the portfolio.
MANY ALTERNATIVES ARE EXPOSED TO THE SAME RISKS AS EQUITIES AND BONDS
Many alternative strategies either lose money at the same time as equities or have little to no return. Historically, an all-weather approach has offered higher returns and greater diversification compared to most other alternatives.
Advantages of an all-weather approach
We believe using an all-weather approach is the most effective way to prepare for a wide range of market environments, while still producing competitive investment returns with limited downside risk.
Combines returns from equities, commodities, fixed income, and currencies across different geographic regions.
Seeking returns from a diverse set of markets can create low volatility performance, allowing investors to stay invested for the long term.
Provides exposure to markets and returns that may not be in typical portfolios.
Can perform well in a variety of market conditions, potentially reducing risk without sacrificing return.
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Investing in securities involves risk of loss that investors should be prepared to bear. Past performance is not indicative of future results. Diversification does not guarantee a profit or protect against a loss.
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