Investment Perspectives
Building resilient multi-asset portfolios
Resilience is less about predicting the next shock than about constructing a portfolio that can endure a range of them.
Portfolios
Every generation of investors encounters a market environment that feels unprecedented. Rather than attempting to forecast each one, long-term investors tend to be better served by portfolios designed to withstand a variety of conditions.
Diversification with a purpose
Diversification is often described as owning many things. A more useful definition is owning things that behave differently for understood reasons. Equities, high-quality bonds, real assets and selected alternative strategies each respond differently to growth, inflation and interest rates.
A resilient portfolio is one where each holding has a clear role, and where the investor understands what that role is.
Liquidity as a source of resilience
Holding adequate liquidity allows investors to meet obligations without being forced to sell assets at inopportune moments. The appropriate level depends on each investor’s circumstances and commitments.
- Know the purpose of every allocation
- Match liquidity to foreseeable needs
- Rebalance with discipline rather than emotion
- Review assumptions, not just results
None of these principles removes risk. They are intended to help investors make decisions with greater clarity when conditions become difficult.
