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As well as positioning portfolios for recovery, we believe a new approach to asset allocation for the long term is required. Put simply, we can no longer rely on many fixed income assets to play their historic role in portfolios. We also reiterate the benefits of getting fully invested sooner rather than later.
Achieving diversification by combining equity and fixed income has become much harder. This requires us to consider additional opportunities for building globally diversified portfolios.
Our rigorous analysis shows that investing immediately has produced better results four‑fifths of the time. Less cash and less waiting is a potent portfolio booster.
Portfolio asset allocations must be revisited when the assumptions that drive them change, as they have in 2020. Our new Strategic Return Estimates reflect new realities that long-term investors cannot ignore.