Insight
Beyond Diversification: A Dual Approach to Portfolio Protection
To manage downside risk in multi-asset portfolios, investors must balance consistency, reactivity, and cost. We introduce a robust framework to navigate the evolving risk landscape and protect portfolios over time.
3/7/2025
15 min read
Topic
Multi-Asset
Key takeaways
- For the past 20 years or so, U.S. stock-bond correlations have been abnormally low compared with correlations over the longer term.
- Managing downside risk in multi-asset portfolios requires a thoughtful balance of consistency, reactivity, and cost.
- By combining Dynamic Risk Hedging (DRH) and Systematic Cross-Asset (Trend) strategies, investors can achieve a more comprehensive and adaptable risk management solution.
- This approach addresses equity risk plus inflation and interest rate risks, aiming for more consistent portfolio performance even during times of market stress.