Talking Hedge | Austin, TX
Join us on May 20 for Bill Marr's panel, "Evolving Managers & Investors Exchange," featuring representatives from Fidelity, J E Moody & Co., Johnson Randall, Snoboll Capital and Zweig-DiMenna Assoc.
Chris Keenan
Chris is responsible for content strategy, product marketing, and communications, and is actively involved with the firm’s product development initiatives.
The New Playbook for Alternative Investing: Offense, Defense, and Special Teams for the Modern Advisor Portfolio
Alternative investments have moved from the sidelines to the mainstream of portfolio construction—and for good reason. Recent policy developments, including the White House Executive Order expanding access to alternatives in retirement plans, reflect recognition that modern portfolios need more than stocks and bonds to deliver diversification, manage risk, and capture new return opportunities.
A New Playbook for Client Portfolios
Asset allocation has always been about balance—finding the right mix of investments to deliver returns, manage risk, and meet client goals. But as markets grow more complex and volatile, the old playbook is no longer enough.
Framing the History of Alts and Asset Allocation Through Football
This 60/40 playbook worked well during eras of falling rates and reliably negative correlations between stocks and bonds. But the game has changed. Investors are concerned about stretched valuations in key asset classes. Interest rates have ratcheted higher. And inflation is unpredictable. As a result, stocks and bonds have become more correlated, meaning both assets may fall together, challenging portfolio diversification.
Today’s Updated Playbook: Alts Playing Alongside Their Stock and Bond Teammates
Today’s markets demand more than a 60/40 or 50/30/20 playbook. Advisors need portfolios that can go beyond stocks and bonds with a few alts tacked on, to respond to market shocks and inflation spikes, navigate geopolitical uncertainty, capture private market opportunities, and deliver income when bond yields disappoint.
Offense: Growth Assets and Strategies
Offense is about moving the ball downfield—driving growth, building wealth, and capturing appreciation over time. In portfolios, offensive strategies target capital gains, whether through public equities, private markets, or emerging opportunities in digital assets.
Defense: Income-Generating Assets and Strategies
Defense in football isn’t passive—it’s about controlling the opponent, protecting your field position, and setting up the next opportunity. In portfolios, defensive strategies start with income, then seek to preserve capital and provide stability when equity markets struggle.
Special Teams: Uncorrelated and Tactical Strategies
In football, special teams don’t play every down—but when they take the field, they can change the game. A well-executed kickoff pins the opponent deep. A clutch field goal leads to an overtime victory. A blocked punt shifts momentum entirely. Special teams have the potential to deliver results when the offense and defense falter.
Coaching the Portfolio Through Changing Conditions
Football coaches don’t call the same play every down, but start with a well-designed plan and the flexibility to adjust. They read the defense, assess field position, consider the clock, and adjust their strategy dynamically. They move players on and off the field based on matchups, fatigue, and game flow.
Why Diversification Still Matters: Reassessing a Core Principle in Today’s New Market Reality
In recent years, the effectiveness of diversification has been called into question, particularly when it is implemented through a conventional pairing of equities and bonds. The current investment landscape, characterized by heightened macroeconomic volatility and unstable asset correlations, necessitates a fresh evaluation of how diversification is applied.
