A Portfolio Rethink

expand icon99risesexpand iconexpand icon31 MAR 2022
A re-think on portfolio construction.
TABLE OF CONTENTS

The 60/40 Fallout

Alternatives

How 99rises Can Help

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The 60/40 asset allocation mantra is dead. Long live 60/40. For the longest time, financial advisors constructed portfolios that were comprised of 60% stocks and 40% bonds or fixed income instruments. But the rising uncertainty due to rising inflation and interest rates, volatile markets, a spate of damaging geopolitical and climatic events, and increased awareness of social inequality has put a dent in this asset allocation methodology.

The 60/40 Fallout

Instead of allocating 60% to stocks and 40% to bonds, advisers now advocate for different weights and diversifying into even greater asset classes. With the extreme complexity of economies, the environment and political risks, investors need a forward-looking perspective that is materially different that passive asset allocations. Enter alternative investments such as hedge funds, private equity, thematic investing, cryptocurrencies and commodities.

With slowing growth, increased volatility, rising interest rates and higher inflation, investors will face a generally more challenging environment going forward.

Alternatives

Alternative investments offer returns that are uncorrelated with that of stocks and bonds. With traditional fixed income assets no longer producing robust income, the reach for yield is becoming front and center. Alternative or private credit is becoming an increasingly important asset class.

Emerging trends include investment in climate change and zero carbon portfolios. Transition to a low-carbon economy is inevitable and clean energy is one of the ways to increase allocations to this uncorrelated strategy. While were likely in the first innings (in baseball parlance) in such a strategic allocation, the time is nigh to have a portion of one's portfolio exposed to such endeavors.

Investing based on environmental, social and governance (ESG) considerations is now also a mainstream practice. 99rises provides two blocks, the ZeroCarbon block and the Renewables block to help investors get access to such asset classes and more are on the horizon. Considering a different set of alternative offerings, such as master limited partnerships, royalties, debt instruments from emerging markets, and long/short debt and equity funds is also prudent.

Our take: You cannot invest in one future anymore; you have to invest in multiple futures. Think multiversal investing!

Trusting stocks and bonds to do the job of providing income, growth, inflation protection, and downside protection is now at best a fallacy.

How 99rises Can Help

For the longest time, hedge fund strategies were not available to everybody. With the explosion of digital technology, fractional ownership is now here to to stay. Anybody can get access to sophisticated strategies available only to the wealthy.

The 99rises blocks gives you exactly that. We are doing away with stocks and bonds and offering folks risk-managed blocks that can give you diversification and uncorrelated returns.

Stay safe, stay nimble, stay humble!

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