The traditional “60/40” stock/bond portfolio isn’t what it used to be, according to Bob Rice, managing partner at Tangent Capital. In this video from InvestmentNews, he says that “macro issues,” such as the rise of the digital economy and unprecedented central bank liquidity have, “changed the game” and created new risks – and new opportunities – neither of which are addressed by a traditional “60/40” portfolio. Most importantly, according to Rice, at current interest rates and with the liquidity risk of bonds, fixed-income just can’t serve the role of dampening portfolio volatility like it has in the past.
Fortunately, there alternative investments that address both the risks and the opportunities that are missed by “60/40” – and many of them are in the form of liquid alternatives. Rice says that while long/short investing is harder, long/short equity works well in a liquid alts format and there are many talented managers, such as Joel Greenblatt of Gotham Capital, operating long/short liquid alternative funds.
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