The traditional 60/40 asset mix was conceived in the 1980s when interest rates were higher and life expectancy was shorter. Current low interest rates, however, have changed portfolio construction assumptions for all investors. Today’s portfolios have reduced allocations to bonds and increased allocations to equities.
More sophisticated investors like institutions have extoled the virtues of alternatives as essential portfolio diversifiers. But what are alternatives, are they suitable for investors and what investment or operational risks do they pose?
The most recent Pension and Investment Institute of Canada (PIAC) Asset Mix Report shows the degree to which Institutions have reshaped the traditional 60/40 portfolio.
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