Does the Foundation Still Support the Structure? Why a Portfolio Rebalance Makes Sense Now

Apollo

Alexander Wright

Research

11 Pages

Apollo argues that strong public equity levels may mask weaker portfolio foundations, including thinner risk compensation, tighter credit spreads, higher concentration, and weaker stock bond diversification. The piece frames private markets as a potential tool for rebalancing portfolios before volatility forces action.

Key Takeaways

Risk Premiums Thinned: The implied equity risk premium fell to 4.36% by May 1, below the 5.16% average of the past two decades.
Portfolio Drift Matters: A 60/40 portfolio left unrebalanced from 2019 to 2025 would have shifted to 77/23 as stocks outpaced bonds.
AI Supports Real Assets: Apollo expects $4 trillion to $5 trillion of digital infrastructure investment by 2030, supporting demand for HALO assets.
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