Investors seeking to put together a multi-asset portfolio were once guided by various rules of thumb, which said that government bonds are inversely correlated with equities, while shares generally rise in line with economic sentiment, rather than central bank action.
The policy response to the Global Financial Crisis in 2008, and now to the pandemic-induced recession, has caused many of those rules of portfolio construction to come under pressure, while the pace of technological change contributes to a period of radical uncertainty for investors and clients.
Perhaps the biggest question mark lingers over the role of government bonds in portfolios, after a decade of record low yields called the diversification benefits of the asset class into question, while materially higher inflation could call the capital value of those assets into question.
Inflows into alternative assets have been strong in recent years as clients look to diversify away from the fresh risks associated with bonds and equities, but how would those assets perform in a world of higher interest rates? And how does the rise of ESG investing impact asset allocation?
This guide seeks answers to all of those questions as part of the solution to constructing a sustainable multi-asset portfolio. It is worth 60 minutes of CPD.