We believe it is increasingly important to consider the benefits of private markets to provide non-traditional income sources and enhanced diversification. By exploring private markets through an economic lens, it becomes clearer where defensive income solutions may truly exist.
In our February 2019 white paper, “Alternative Facts: How Alternative Asset Classes Can Improve Portfolios,” we provided an overview of the alternative investment landscape and what it could mean for investors and the future of asset allocation. Low yields and rising correlations have forced many investors to diversify away from the traditional 60/40 portfolio. Strategies such as agricultural land, infrastructure, and private debt are becoming more favorable options for their diversifying effects and ability to improve risk and reward dynamics.
In this two-part paper, we revisit some of these themes and their implications in a world with persistent low yields, where traditional asset classes are behaving untraditionally. These trends have developed over many years, and the COVID-19 crisis only exacerbated them – stifling economic activity and prompting record-level stimulus measures from fiscal and monetary authorities. Given the current environment and the potential long-term impacts of this crisis, it appears now, more than ever, investors should question traditional assumptions and examine the full investment spectrum to meet their investment goals.
