The Road Ahead: Of Rocks and Hard Places

Man Group

Research

7 Pages

Man Institute explores how long only equity and bond investors can navigate an unappealing valuation backdrop using portfolio construction tools. The authors show that traditional sixty forty and risk parity portfolios imply modest ten year returns relative to common targets and then propose three responses equal risk weighting, carefully used leverage and diversifying trend strategies.

Date published: July 6, 2023

Key Takeaways

Challenging starting point: Rich equity valuations and modest bond yields make meeting typical real return targets difficult from here.
Risk parity insight: Risk parity portfolios show slightly lower expected returns than sixty forty but more reliable outcomes at similar starting valuations.
Leverage and trend: Carefully applied leverage plus a strategic allocation to trend strategies can lift portfolio returns and improve diversification.

Join our newsletter to have all of this content + Exclusive Newsletter Bonus Content delivered to your inbox every week

Scroll to Top